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TiVo (TIVO) Shares Rally 5% on Q1 Earnings Beat, Revenues Down

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Shares of TiVo Corporation rallied nearly 5% in the extended trading session yesterday after it reported better-than-expected first-quarter 2020 bottom-line results. The company’s first-quarter non-GAAP earnings per share increased to 30 cents from the year-ago quarter’s 8 cents, mainly on its stringent cost management. Quarterly earnings surpassed the Zacks Consensus Estimate of 24 cents per share.

However, TiVo’s revenues of $160 million missed the Zacks Consensus Estimate of $166 million. Nonetheless, quarterly revenues improved 1% year over year. Increase in IP licensing revenues on subscriber growth and execution of new licenses was the key driver.

Quarter in Detail

In terms of business segments, Product (54% of total revenues) sales were down 5.3% to $91.7 million. This decline was primarily due to unfavorable year-over-year comparison where the company executed a $6.7-million perpetual Passport license agreement with an international MSO customer during first-quarter 2019. However, a $2.9-million increase in TV-viewership data revenues partially offset the negative impact of the aforementioned factor.

Under the Product segment, Platform Solutions decreased 9% to $64.5 million. Additionally, revenues from Other products, primarily legacy analog ACP product, decreased 16% to $0.3 million. However, Software and Services improved 9% to $21.6 million, aided by new TV Viewership Data deals.

Core Product revenues (excluding revenues from Hardware and Other Products) fell 6% to $83.5 million.

TiVo Corporation Price, Consensus and EPS Surprise

TiVo Corporation Price, Consensus and EPS Surprise

TiVo Corporation price-consensus-eps-surprise-chart | TiVo Corporation Quote

IP Licensing (46% of total revenues) sales increased 10% year over year to $73.4 million. Revenues from US Pay TV Providers, and New Media, International Pay TV Providers and Other grew 7% and 23% to $45.1 million and $19.9 million, respectively. However, CE Manufacturers sales fell 3% year over year to $8.3 million.

Non-GAAP total COGS and OpEx declined 16% year over year to $101.7 million chiefly due to the company’s focused execution on cost savings, partially negated by rise in patent-litigation costs.

Adjusted EBITDA was up 55% from the year-ago quarter to $58.2 million on higher IP licensing revenues and the company’s cost-saving initiatives. Segment-wise, Product and IP Licensing divisions’ adjusted EBITDA grew 121% and 14%, respectively.

TiVo exited the reported quarter with cash, cash equivalents and short-term marketable securities of $108.5 million compared with the $425 million witnessed at the end of the previous quarter.

Merger Update

Management sounded very optimistic about the ongoing merger of TiVo with Xperi. The company anticipates completing the transaction in the ongoing quarter. TiVo believes combining the respective product and IP business to operate as separate business units will put them in a stronger operating and competitive position.

Therefore, citing the pending merger, TiVo didn’t issue any standalone outlook for the remainder of the year. The company anticipates the combined entity will provide financial expectations after the second quarter.

Zacks Rank and Other Key Picks

Currently, TiVo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader technology sector include Inphi Corporation , Workday, Inc. (WDAY - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each carrying a Zacks Rank #2, at present.

The long-term earnings growth rate for Inphi, Workday and NVIDIA is currently pegged at 37.6%, 26.2%, and 15.2%, respectively.

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