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TiVo Corp (TIVO) Tops Q1 Earnings and Revenue Estimates
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Digital home entertainment services and solutions provider, TiVo Corporation reported strong results for first-quarter 2017, wherein both the top and bottom lines came ahead of our expectations.
The company posted adjusted earnings (excluding all one-time items but including stock-based compensation) of 22 cents per share, which fared better than the Zacks Consensus Estimate of 14 cents. However, on a year-over-year basis the figure was a couple of cents lower, as the benefit from robust revenues performance was more than offset by increased costs and higher number of shares outstanding.
On GAAP basis, TiVo reported loss of 29 cents per share from continuing operations compared with loss of 22 cents posted in the year-ago quarter.
TiVo Corporation Price, Consensus and EPS Surprise
It should be noted that TiVo Corporation was formerly known as Rovi Corporation. Upon successfully completing the acquisition of TiVo Inc. in early Sep 2016, Rovi adopted the iconic TiVo brand name.
Thus, it is the third quarterly results of the combined company. Let’s discuss the quarter in detail –
Quarter in Detail
TiVo’s revenues surged 73.8% year over year to $205.8 million mainly backed by the acquisition of TiVo Inc.’s business, new licensing agreements and launch of innovative products. Notably, increasing demand for Pay-TVs has prompted various Pay-TV service providers, TV manufacturers, mobile device makers and OTT companies to make licensing deals with TiVo.
The company’s revenues from the Licensing, services and software division jumped 61.5% year over year to $190.6 million, contributing 93% to total revenue. The Hardware division’s revenues grew to $15.2 million from a mere $0.4 million recorded in the year-ago quarter and contributed 7% to total revenue.
In terms of business segments, IP Licensing revenues rose 61.3% year over year to $90.7 million and contributed 44% to total revenue. Under the IP Licensing segment, revenues of the U.S. Pay TV Providers soared a whopping 90.2% to $63.3 million, while Other revenues increased 19.3% year over year to $27.4 million.
Product revenues surged 85.2% to $115 million, contributing 56% to total revenue. Under this segment, Platform Solutions revenues increased about 2.5 times year over year to $88.2 million, and Software and Services sales climbed 23.9%. On the contrary, Other vertical’s revenues plummeted 74.6% to $1.6 million.
The company’s total cost of goods sold and expenses almost doubled to $211.1 million from $107 million in the year-ago quarter.
TiVo’s net loss from continuing operations increased 137.7% year over year to $29.1 million, mainly due to escalating cost and expenses.
TiVo exited the quarter with cash, cash equivalents and short-term investments of $290.9 million compared with $309.7 million at the end of the previous quarter.
Outlook
TiVo reiterated its revenue outlook for 2017, but increased the GAAP loss before taxes projection. The company anticipates revenues in the range of $800–$835 million (mid-point $817.5 million) this year. However, at the mid-point, the figure marginally fell short of the Zacks Consensus Estimate of $822.64 million.
Further, the company projects GAAP loss before taxes to lie between $68 million and $83 million, up from the previous expectation of $55–$70 million. Non-GAAP pre-tax Income is still expected to be in the range of $200–$225 million.
Our Take
We are encouraged by the company’s robust top-line growth, which was mainly driven by the inclusion of the recently merged TiVo Inc.’s business, new licensing agreements, as well as the introduction of innovative products.
Prior to the acquisition, Rovi provided a set of solutions that allowed businesses to protect, enable and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. On the other hand, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.
The merger has brought together two leading players in the media entertainment industry, with complementary products and services as well as a number of patented technologies. The new TiVo Corporation is the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to DVR. The combined company has emerged as the world’s leading media and entertainment provider to deliver the ultimate entertainment experience.
Apart from this, the combined company has over 6,000 issued and pending patents, which offer it a competitive advantage over other media and tech giants.
Nonetheless, the actual synergies from the merger will take some time to reflect in the company’s performance and much depends on how successfully it integrates the legacy business of TiVo.
Notably, TiVo has underperformed the Zacks categorized Internet Services industry in the year-to-date period. While the industry recorded growth of 16.2% in the said period, the stock lost 7.2% of its value.
Currently, TiVo carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Internet Services space are Alphabet Inc. (GOOGL - Free Report) , TrueCar Inc. (TRUE - Free Report) and InterXion Holding . Of these, Alphabet sports a Zacks Rank #1 (Strong Buy), while TrueCar and InterXion Holding hold Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Expected long-term EPS growth rate for Alphabet, TrueCar and InterXion Holding are 16.7%, 100% and 13.6%, respectively.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
TiVo Corp (TIVO) Tops Q1 Earnings and Revenue Estimates
Digital home entertainment services and solutions provider, TiVo Corporation reported strong results for first-quarter 2017, wherein both the top and bottom lines came ahead of our expectations.
The company posted adjusted earnings (excluding all one-time items but including stock-based compensation) of 22 cents per share, which fared better than the Zacks Consensus Estimate of 14 cents. However, on a year-over-year basis the figure was a couple of cents lower, as the benefit from robust revenues performance was more than offset by increased costs and higher number of shares outstanding.
On GAAP basis, TiVo reported loss of 29 cents per share from continuing operations compared with loss of 22 cents posted in the year-ago quarter.
TiVo Corporation Price, Consensus and EPS Surprise
TiVo Corporation Price, Consensus and EPS Surprise | TiVo Corporation Quote
It should be noted that TiVo Corporation was formerly known as Rovi Corporation. Upon successfully completing the acquisition of TiVo Inc. in early Sep 2016, Rovi adopted the iconic TiVo brand name.
Thus, it is the third quarterly results of the combined company. Let’s discuss the quarter in detail –
Quarter in Detail
TiVo’s revenues surged 73.8% year over year to $205.8 million mainly backed by the acquisition of TiVo Inc.’s business, new licensing agreements and launch of innovative products. Notably, increasing demand for Pay-TVs has prompted various Pay-TV service providers, TV manufacturers, mobile device makers and OTT companies to make licensing deals with TiVo.
The company’s revenues from the Licensing, services and software division jumped 61.5% year over year to $190.6 million, contributing 93% to total revenue. The Hardware division’s revenues grew to $15.2 million from a mere $0.4 million recorded in the year-ago quarter and contributed 7% to total revenue.
In terms of business segments, IP Licensing revenues rose 61.3% year over year to $90.7 million and contributed 44% to total revenue. Under the IP Licensing segment, revenues of the U.S. Pay TV Providers soared a whopping 90.2% to $63.3 million, while Other revenues increased 19.3% year over year to $27.4 million.
Product revenues surged 85.2% to $115 million, contributing 56% to total revenue. Under this segment, Platform Solutions revenues increased about 2.5 times year over year to $88.2 million, and Software and Services sales climbed 23.9%. On the contrary, Other vertical’s revenues plummeted 74.6% to $1.6 million.
The company’s total cost of goods sold and expenses almost doubled to $211.1 million from $107 million in the year-ago quarter.
TiVo’s net loss from continuing operations increased 137.7% year over year to $29.1 million, mainly due to escalating cost and expenses.
TiVo exited the quarter with cash, cash equivalents and short-term investments of $290.9 million compared with $309.7 million at the end of the previous quarter.
Outlook
TiVo reiterated its revenue outlook for 2017, but increased the GAAP loss before taxes projection. The company anticipates revenues in the range of $800–$835 million (mid-point $817.5 million) this year. However, at the mid-point, the figure marginally fell short of the Zacks Consensus Estimate of $822.64 million.
Further, the company projects GAAP loss before taxes to lie between $68 million and $83 million, up from the previous expectation of $55–$70 million. Non-GAAP pre-tax Income is still expected to be in the range of $200–$225 million.
Our Take
We are encouraged by the company’s robust top-line growth, which was mainly driven by the inclusion of the recently merged TiVo Inc.’s business, new licensing agreements, as well as the introduction of innovative products.
Prior to the acquisition, Rovi provided a set of solutions that allowed businesses to protect, enable and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. On the other hand, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.
The merger has brought together two leading players in the media entertainment industry, with complementary products and services as well as a number of patented technologies. The new TiVo Corporation is the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to DVR. The combined company has emerged as the world’s leading media and entertainment provider to deliver the ultimate entertainment experience.
Apart from this, the combined company has over 6,000 issued and pending patents, which offer it a competitive advantage over other media and tech giants.
Nonetheless, the actual synergies from the merger will take some time to reflect in the company’s performance and much depends on how successfully it integrates the legacy business of TiVo.
Notably, TiVo has underperformed the Zacks categorized Internet Services industry in the year-to-date period. While the industry recorded growth of 16.2% in the said period, the stock lost 7.2% of its value.
Currently, TiVo carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the Internet Services space are Alphabet Inc. (GOOGL - Free Report) , TrueCar Inc. (TRUE - Free Report) and InterXion Holding . Of these, Alphabet sports a Zacks Rank #1 (Strong Buy), while TrueCar and InterXion Holding hold Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Expected long-term EPS growth rate for Alphabet, TrueCar and InterXion Holding are 16.7%, 100% and 13.6%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>