TiVo (NSDQ: TIVO) looks like it wrung decent numbers out of a mixed quarter… Revenue for the quarter was up 4.1 percent to $65.2 million, compared to $62.65 million in the year ago quarter. However excluding hardware, the service and technology portion of revenue fell to $53.5 million from $56.5 million. Analysts had been looking for $55.3 million, so this number is on the light side. Positively, it does say it had $10.6 million in adjusted EBITDA and $2.9 million in net income, which it attributed to higher hardware margins and a pull back in marketing costs. The pullback in SAC is actually quite pronounced: “Our continued efforts to focus on efficient marketing spend and to work with third parties who make their own marketing expenditures on behalf of TiVo is underscored by the decline of our quarterly subscription acquisition costs (SAC) to $135, a considerable decrease when compared to SAC of $758 during the same period last year even considering that the prior year’s SAC included the impact of the $11.2 million inventory reserve.”
Looking forward, the company expects Q3 service and technology of revenue of $49-$51 million (a sequential decline) and a net loss of $7-$9 million.
More from the call after the jump…
Conference Call: TiVO CEO Tom Rogers warned TV networks that ad-skipping is here to stay and that and that it’s “by no means a phenomena of TiVo early adopters.” The answer: Use TiVo’s own DVR-optimized ad solution. The company isn’t saying how much its making from these (much hyped) services, just that the number of participants is growing rapidly.
— Network DVR: Rogers was asked about the big Cablevision (NYSE: CVC) ruling, that cable networks could offer their own DVRs in the cloud. Rogers applied a little fud, noting “there are a lot of legal issues that still need to be resolved on that front.” But he said ultimately it wouldn’t affect the company’s relationship with the cable networks and that TiVo’s proposition is more than just a DVR service. Basically, it’s making the same argument against the network DVR as it does generic DVRs: that they can’t compete with TiVo’s feature-rich offering. He then added: “Our view is that the cable industry has totally inadequate capacity at this point for broad scale distribution of the network DVR.”
Update: As usual, TiVo earnings are accompanied by announcements. Comcast (NSDQ: CMCSA) is now offering TiVo service on set-tops in Connecticut with more rollouts and a marketing push due later this year. The earnings release includes an odd anonymous statement from “a top Comcast executive” who says the cable operator is pleased with the progress and will continue to fund development for TiVo.
Also, Time Inc.’s Entertainment Weekly, which has 1.8 million subscribers, will offer free critics picks directly to the device. This follows a similar deal last May with the Chicago Tribune for critics’ programming picks. The Trib gets a share of subscriber revenue based on how many sign up for the service. No financial terms were disclosed for this one but like a similar arrangement. EW editor Scott Donaton tells WSJ that 60 percent of the magazine’s subs use DVRs.