Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TIVO INC | fy2016-q48xk.htm |
| EX-99.1 - PRESS RELEASE DATE MARCH 1, 2016 - TIVO INC | a99-01xpressreleasedatedma.htm |
| EX-99.2 - FOURTH QUARTER FISCAL YEAR 2016 EARNINGS PRESENTATION - TIVO INC | q416earningspresentation.htm |
Exhibit 99.3
Trend Sheet for GAAP Statement of Operations | ||||||||||||||||||||||||
(unaudited, in thousands, except per share data) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Jan 31, | Oct 31, | July 31, | April 30, | Jan 31, | Oct 31, | July 31, | April 30, | |||||||||||||||||
2016 | 2015 | 2015 | 2015 | 2015 | 2014 | 2014 | 2014 | |||||||||||||||||
Income Statement | ||||||||||||||||||||||||
Net revenues | $ | 123,109 | $ | 132,315 | $ | 119,454 | $ | 114,734 | $ | 114,132 | $ | 118,430 | $ | 111,858 | $ | 107,059 | ||||||||
Hardware revenues | 21,362 | 29,506 | 20,358 | 22,314 | 22,463 | 30,366 | 25,232 | 21,058 | ||||||||||||||||
Cost of hardware revenues | 23,994 | 30,837 | 20,185 | 22,571 | 25,041 | 28,176 | 22,524 | 19,764 | ||||||||||||||||
Service and software & technology revenues | $ | 101,747 | $ | 102,809 | $ | 99,096 | $ | 92,420 | $ | 91,669 | $ | 88,064 | $ | 86,626 | $ | 86,001 | ||||||||
Service and software revenues | 47,557 | 44,674 | 43,098 | 39,849 | 40,498 | 36,705 | 36,909 | 35,895 | ||||||||||||||||
Technology revenues | 54,190 | 58,135 | 55,998 | 52,571 | 51,171 | 51,359 | 49,717 | 50,106 | ||||||||||||||||
Cost of service and software & technology revenues | $ | 25,336 | $ | 28,170 | $ | 23,881 | $ | 21,575 | $ | 22,947 | $ | 21,537 | $ | 19,419 | $ | 18,394 | ||||||||
Cost of service and software revenues (1) | 17,160 | 17,766 | 15,171 | 15,439 | 17,037 | 14,970 | 13,750 | 13,850 | ||||||||||||||||
Cost of technology revenues (1) | 8,176 | 10,404 | 8,710 | 6,136 | 5,910 | 6,567 | 5,669 | 4,544 | ||||||||||||||||
Gross margin of service and software & technology revenues | $ | 76,411 | $ | 74,639 | $ | 75,215 | $ | 70,845 | $ | 68,722 | $ | 66,527 | $ | 67,207 | $ | 67,607 | ||||||||
Operating expenses | ||||||||||||||||||||||||
Research and development (1) | 28,410 | $ | 28,027 | $ | 26,309 | $ | 25,014 | $ | 25,265 | $ | 25,546 | $ | 25,051 | $ | 26,347 | |||||||||
Sales and marketing (1) | 11,662 | 12,172 | 11,930 | 10,941 | 10,910 | 10,544 | 10,284 | 10,315 | ||||||||||||||||
Sales and marketing, subscription acquisition costs | 5,209 | 3,612 | 1,117 | 1,691 | 3,455 | 2,734 | 1,212 | 1,505 | ||||||||||||||||
General and administrative (1) | 15,624 | 13,461 | 15,880 | 14,822 | 14,076 | 14,292 | 15,760 | 15,354 | ||||||||||||||||
Transition and restructuring (1) | 12,820 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Interest and other income (expense) | (3,331 | ) | (4,973 | ) | (4,091 | ) | (3,949 | ) | (3,853 | ) | (2,127 | ) | (1,002 | ) | (832 | ) | ||||||||
Provision for income tax | 3,476 | (5,783 | ) | (7,722 | ) | (6,292 | ) | (1,529 | ) | (7,129 | ) | (7,299 | ) | (6,424 | ) | |||||||||
Net income for purpose of computing net income per share - basic | $ | 199 | $ | 5,280 | $ | 8,339 | $ | 7,879 | $ | 7,056 | $ | 6,345 | $ | 9,307 | $ | 8,124 | ||||||||
Net income for purpose of computing net income per share - diluted | 199 | 5,280 | 9,595 | 9,130 | 8,308 | 6,345 | 10,545 | 9,375 | ||||||||||||||||
Net income per basic common share | $ | — | $ | 0.06 | $ | 0.09 | $ | 0.09 | $ | 0.07 | $ | 0.06 | $ | 0.08 | $ | 0.07 | ||||||||
Net income per diluted common share | $ | — | $ | 0.06 | $ | 0.09 | $ | 0.08 | $ | 0.07 | $ | 0.06 | $ | 0.08 | $ | 0.07 | ||||||||
Weighted average common shares outstanding - basic | 93,051 | 92,759 | 92,383 | 91,454 | 96,288 | 107,498 | 110,036 | 113,382 | ||||||||||||||||
Weighted average common shares outstanding - diluted | 95,358 | 95,188 | 110,381 | 110,545 | 115,667 | 111,870 | 129,249 | 133,204 | ||||||||||||||||
Balance Sheet & Cash Flow | ||||||||||||||||||||||||
Cash & cash equivalents, and short-term investments | $ | 646,069 | $ | 670,899 | $ | 713,023 | $ | 686,299 | $ | 742,961 | $ | 855,374 | $ | 782,643 | $ | 742,108 | ||||||||
Net cash provided by (used in) operating activities (YTD) | 288 | 23,153 | 16,629 | (25,560 | ) | 22,901 | 16,998 | 14,100 | (23,109 | ) | ||||||||||||||
(1) Includes Stock-based compensation expenses as follows: | $ | 13,631 | $ | 7,488 | $ | 7,081 | $ | 7,125 | $ | 8,101 | $ | 8,549 | $ | 8,722 | $ | 8,309 | ||||||||
Cost of service and software revenues | 418 | 445 | 418 | 497 | 472 | 495 | 477 | 426 | ||||||||||||||||
Cost of technology revenues | 311 | 385 | 471 | 256 | 313 | 332 | 297 | 305 | ||||||||||||||||
Cost of hardware revenues | 29 | 34 | 29 | 40 | 52 | 61 | 57 | 81 | ||||||||||||||||
Research and development | 1,685 | 1,969 | 1,786 | 2,018 | 2,697 | 2,735 | 3,040 | 2,988 | ||||||||||||||||
Sales and marketing | 1,227 | 1,249 | 1,174 | 1,104 | 956 | 1,250 | 1,245 | 1,314 | ||||||||||||||||
General and administrative | 3,562 | 3,406 | 3,203 | 3,210 | 3,611 | 3,676 | 3,606 | 3,195 | ||||||||||||||||
Transition and restructuring | 6,399 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Trend Sheet for Non-GAAP Key Financial Metrics (1) | ||||||||||||||||||||||||
(unaudited, in thousands except per share data) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Jan 31, | Oct 31, | July 31, | April 30, | Jan 31, | Oct 31, | July 31, | April 30, | |||||||||||||||||
2016 | 2015 | 2015 | 2015 | 2015 | 2014 | 2014 | 2014 | |||||||||||||||||
Reconciliation to EBITDA and Adjusted EBIDTA | ||||||||||||||||||||||||
Net income | $ | 199 | $ | 5,280 | $ | 8,339 | $ | 7,879 | $ | 7,056 | $ | 6,345 | $ | 9,307 | $ | 8,124 | ||||||||
Add back: | ||||||||||||||||||||||||
Depreciation & amortization | 4,684 | 4,624 | 4,374 | 3,758 | 3,607 | 3,532 | 3,540 | 3,228 | ||||||||||||||||
Interest income & expense | 3,553 | 3,672 | 3,910 | 3,949 | 3,865 | 2,113 | 1,001 | 832 | ||||||||||||||||
Provision (Benefit) for income tax | (3,476 | ) | 5,783 | 7,722 | 6,292 | 1,529 | 7,129 | 7,299 | 6,424 | |||||||||||||||
EBITDA | $ | 4,960 | $ | 19,359 | $ | 24,345 | $ | 21,878 | $ | 16,057 | $ | 19,119 | $ | 21,147 | $ | 18,608 | ||||||||
Earn-outs amortization and changes in fair value of earn-outs | 1,024 | 1,306 | 998 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Loss on repurchase of notes payable | 0 | 1,141 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Stock-based compensation excluding transition and restructuring charge | 7,233 | 7,488 | 7,081 | 7,125 | 8,101 | 8,549 | 8,722 | 8,309 | ||||||||||||||||
Transition and restructuring, pre-tax | 12,820 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Litigation expenses | 603 | (1,133 | ) | 103 | 135 | 511 | 1,096 | 84 | 431 | |||||||||||||||
Litigation proceeds (past damage awards) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||
Adjusted EBITDA | $ | 26,640 | $ | 28,161 | $ | 32,527 | $ | 29,138 | $ | 24,669 | $ | 28,764 | $ | 29,953 | $ | 27,348 | ||||||||
Service and Software Revenues | ||||||||||||||||||||||||
TiVo-Owned-related service revenues | $ | 20,068 | $ | 20,508 | $ | 20,945 | $ | 21,047 | $ | 21,541 | $ | 21,810 | $ | 22,388 | $ | 22,510 | ||||||||
MSOs'-related service revenues | 19,824 | 16,942 | 15,285 | 14,078 | 13,675 | 10,563 | 10,328 | 9,950 | ||||||||||||||||
Media services and other service and software revenues | 7,665 | 7,224 | 6,868 | 4,724 | 5,282 | 4,332 | 4,193 | 3,435 | ||||||||||||||||
Total Service and Software Revenues | $ | 47,557 | $ | 44,674 | $ | 43,098 | $ | 39,849 | $ | 40,498 | $ | 36,705 | $ | 36,909 | $ | 35,895 | ||||||||
Subscription Metrics | ||||||||||||||||||||||||
TiVo-Owned subscription gross additions | 60 | 52 | 37 | 39 | 59 | 36 | 27 | 32 | ||||||||||||||||
TiVo-Owned subscription cancellations | (41 | ) | (41 | ) | (40 | ) | (39 | ) | (43 | ) | (45 | ) | (47 | ) | (41 | ) | ||||||||
TiVo-Owned churn rate per month | (1.4 | )% | (1.4 | )% | (1.4 | )% | (1.4 | )% | (1.5 | )% | (1.6 | )% | (1.6 | )% | (1.4 | )% | ||||||||
TiVo-Owned net additions (losses) | 19 | 11 | (3 | ) | 0 | 16 | (9 | ) | (20 | ) | (9 | ) | ||||||||||||
TiVo-Owned cumulative subscriptions | 971 | 952 | 941 | 944 | 944 | 928 | 937 | 957 | ||||||||||||||||
% of TiVo-Owned cumulative subscriptions paying recurring fees | 43 | % | 43 | % | 44 | % | 45 | % | 46 | % | 48 | % | 49 | % | 50 | % | ||||||||
Fully amortized active product lifetime subscriptions | 153 | 153 | 150 | 147 | 149 | 152 | 159 | 161 | ||||||||||||||||
MSOs net additions | 318 | 418 | 284 | 285 | 324 | 337 | 283 | 341 | ||||||||||||||||
Total subscription net additions | 337 | 429 | 281 | 285 | 340 | 328 | 263 | 332 | ||||||||||||||||
MSOs cumulative subscriptions | 5,833 | 5,515 | 5,097 | 4,813 | 4,528 | 4,204 | 3,867 | 3,584 | ||||||||||||||||
Total cumulative subscriptions | 6,804 | 6,467 | 6,038 | 5,757 | 5,472 | 5,132 | 4,804 | 4,541 | ||||||||||||||||
MSOs average subscriptions | 5,673 | 5,294 | 4,951 | 4,669 | 4,368 | 4,035 | 3,727 | 3,420 | ||||||||||||||||
TiVo-Owned ARPU & Subscription Acquisition Costs | ||||||||||||||||||||||||
TiVo-Owned-related service revenues | $ | 20,068 | $ | 20,508 | $ | 20,945 | $ | 21,047 | $ | 21,541 | $ | 21,810 | $ | 22,388 | $ | 22,510 | ||||||||
TiVo-Owned average subscriptions | 962 | 947 | 943 | 944 | 935 | 930 | 946 | 961 | ||||||||||||||||
TiVo-Owned ARPU per month | $6.95 | $7.22 | $7.40 | $7.43 | $7.68 | $7.82 | $7.89 | $7.81 | ||||||||||||||||
TiVo-Owned total acquisition costs (Quarterly) | $ | 9,274 | $ | 9,497 | $ | 4,590 | $ | 5,534 | $ | 9,025 | $ | 5,568 | $ | 3,933 | $ | 4,146 | ||||||||
TiVo-Owned subscription gross additions (Quarterly) | 60 | 52 | 37 | 39 | 59 | 36 | 27 | 32 | ||||||||||||||||
TiVo-Owned subscription acquisition costs (Quarterly) | $ | 155 | $ | 183 | $ | 124 | $ | 142 | $ | 153 | $ | 155 | $ | 146 | $ | 130 | ||||||||
TiVo-Owned total acquisition costs ( 12 months ended) | $ | 28,895 | $ | 28,646 | $ | 24,717 | $ | 24,060 | $ | 22,672 | $ | 23,531 | $ | 23,240 | $ | 24,875 | ||||||||
TiVo-Owned subscription gross additions (12 months ended) | 188 | 187 | 171 | 161 | 154 | 144 | 141 | 134 | ||||||||||||||||
TiVo-Owned subscription acquisition costs (12 months ended) | $ | 154 | $ | 153 | $ | 145 | $ | 149 | $ | 147 | $ | 163 | $ | 165 | $ | 186 | ||||||||
MSO Household Metrics | ||||||||||||||||||||||||
Total MSO households | 4,837 | 4,605 | 4,286 | 4,082 | 3,889 | 3,651 | 3,391 | 3,172 | ||||||||||||||||
MSO average households | 4,722 | 4,435 | 4,180 | 3,985 | 3,774 | 3,521 | 3,283 | 3,036 | ||||||||||||||||
(1) This presentation is not prepared under a comprehensive set of accounting rules or principles such as GAAP.
EBITDA and Adjusted EBITDA Results. TiVo's "EBITDA" means income before interest income and expense, provision for income taxes and depreciation and amortization. TiVo's "Adjusted EBITDA" is EBITDA adjusted for acquisition related charges for retention earn-outs payable to former shareholders of the business we acquired and changes in fair value of acquired business' performance related earn-outs, transition charge, pre-tax, stock-based compensation, litigation expenses associated with litigation matters (whether or not initiated by us) which have the potential to result in revenue generation and litigation proceeds attributable to past damage awards, but includes litigation proceeds recognized as technology licensing revenue. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, which we refer to as GAAP. We have presented EBITDA and Adjusted EBITDA solely as supplemental disclosure because we believe they allow for a more complete analysis of our results of operations and we believe that EBITDA and Adjusted EBITDA are useful to investors because EBITDA and Adjusted EBITDA are commonly used to analyze companies on the basis of operating performance. In addition, because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation enhances the ability of management and investors to evaluate our operating performance over multiple periods. Management does not use EBITDA or Adjusted EBITDA as a measure of liquidity because, among other things, they do not exclude the impact of deferred revenue from IP settlements nor the impact of deferred revenues associated with the amortization of product lifetime subscriptions. We do not use stock-based compensation expense in our internal measures. A limitation associated with these non-GAAP measures is that they do not include any stock-based compensation expense related to hiring, retaining, and incentivizing the Company's workforce. EBITDA and Adjusted EBITDA are not intended to represent, and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP.
Three Months Ended | ||||||||||||||||
(Subscriptions and Households in thousands) | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | ||||||||
TiVo-Owned Gross Additions: | 60 | 52 | 37 | 39 | 59 | 36 | 27 | 32 | ||||||||
Net Additions/(Losses): | ||||||||||||||||
TiVo-Owned | 19 | 11 | (3 | ) | 0 | 16 | (9 | ) | (20 | ) | (9 | ) | ||||
MSOs | 318 | 418 | 284 | 285 | 324 | 337 | 283 | 341 | ||||||||
Total Net Additions/(Losses) | 337 | 429 | 281 | 285 | 340 | 328 | 263 | 332 | ||||||||
Cumulative Subscriptions: | ||||||||||||||||
TiVo-Owned | 971 | 952 | 941 | 944 | 944 | 928 | 937 | 957 | ||||||||
MSOs | 5,833 | 5,515 | 5,097 | 4,813 | 4,528 | 4,204 | 3,867 | 3,584 | ||||||||
Total Cumulative Subscriptions | 6,804 | 6,467 | 6,038 | 5,757 | 5,472 | 5,132 | 4,804 | 4,541 | ||||||||
Average Subscriptions: | ||||||||||||||||
TiVo-Owned Average Subscriptions | 962 | 947 | 943 | 944 | 935 | 930 | 946 | 961 | ||||||||
MSO Average Subscriptions | 5,673 | 5,294 | 4,951 | 4,669 | 4,368 | 4,035 | 3,727 | 3,420 | ||||||||
Total Average Subscriptions: | 6,635 | 6,241 | 5,894 | 5,613 | 5,303 | 4,965 | 4,673 | 4,381 | ||||||||
Total MSO Households | 4,837 | 4,605 | 4,286 | 4,082 | 3,889 | 3,651 | 3,391 | 3,172 | ||||||||
MSO Average Households | 4,722 | 4,435 | 4,180 | 3,985 | 3,774 | 3,521 | 3,283 | 3,036 | ||||||||
TiVo-Owned Fully Amortized Active Product Lifetime Subscriptions | 153 | 153 | 150 | 147 | 149 | 152 | 159 | 161 | ||||||||
% of TiVo-Owned Cumulative Subscriptions paying recurring fees | 43 | % | 43 | % | 44 | % | 45 | % | 46 | % | 48 | % | 49 | % | 50 | % |
Subscriptions and Households. Management reviews the number of subscriptions and households, and believes they may be useful to investors, in order to evaluate our relative position in the marketplace and to forecast future potential service revenues. Above is a table that details the change in our subscription base during the last eight quarters. The TiVo-Owned Subscription lines refer to subscriptions sold directly or indirectly by TiVo to end-users who have TiVo-enabled devices (such as a DVR or TiVo Mini) and for which TiVo incurs acquisition costs. The MSO Subscription lines refer to subscriptions sold to end-users by MSOs such as Cogeco, Com Hem, Mediacom, Vodafone Spain (ONO), RCN, Suddenlink, and Virgin, among others, and for which TiVo expects to incur little or no acquisition costs. Additionally, we provide a breakdown of the average subscriptions for the quarter, the total MSO households and the MSO average households for the quarter, the number of fully amortized active product lifetime
subscriptions, and percent of TiVo-Owned Subscriptions for which consumers pay recurring fees as opposed to a one-time prepaid product lifetime fee.
We define a “subscription” as a contract referencing a TiVo-enabled device such as a DVR or a non-DVR device such as a TiVo Mini for which (i) an end-user has paid or committed to pay for the TiVo service and (ii) service is not canceled. Each TiVo-Owned Subscription represents a single TiVo-enabled device (as defined above) and therefore one or more TiVo-Owned Subscriptions may be present in a single household. TiVo-Owned Subscriptions currently pay for the TiVo service on a recurring payment plan (such as a monthly or annual payment plan) or on a one-time basis for the life of TiVo-enabled device (referred to as product lifetime subscriptions here and sold commercially as All-in subscriptions). Beginning in October 2014, each TiVo Mini device sale includes a product lifetime subscription for that TiVo Mini device, which have much lower average revenues than DVRs. Sales of the TiVo Mini device began in March 2013. TiVo Mini represented 16% and 9% of cumulative TiVo-Owned Subscriptions as of January 31, 2016 and 2015, respectively. Increasing sales of TiVo Minis have helped slow, and in some quarters, led to increases in our cumulative TiVo-Owned Subscriptions as well as increased the number of subscriptions (devices) per TiVo-Owned household. This trend has resulted in a slower rate of decline in the total number of TiVo-Owned households. The 22% increase in gross additions of TiVo-Owned Subscriptions in Fiscal Year 2016 as compared to Fiscal Year 2015 led to a net addition of TiVo-Owned Subscriptions, which was driven primarily on changes in our whole-home pricing, related to the bundling of product lifetime subscriptions with each TiVo Mini device sold, sales of our TiVo OTA (over-the-air) product, and the launch of our latest innovation the TiVo BOLT(TM) product. Subscriptions do not include soft-clients (i.e. mobile applications or web portal) or digital tuning adapter users. We count product lifetime subscriptions in our subscription base until both of the following conditions are met: (i) the period we use to recognize product lifetime subscription revenues ends; and (ii) the related TiVo-enabled device has not made contact with the TiVo service within the prior six month period. Product lifetime subscriptions past this period which have not called into the TiVo service for six months are not counted in this total.
We define a "household" as one or more devices associated with the same contract or customer number. We currently do not report TiVo-Owned households as we currently receive incremental revenue for each new TiVo-Owned Subscription in the TiVo-Owned business whereas, in some cases, our MSO customers pay us on a per household basis. MSO Subscriptions are a count of the number of devices that connect to the TiVo service and one or more devices may be present in a single MSO Household.
We calculate average subscriptions for the period by adding the average subscriptions for each month and dividing by the number of months in the period. We calculate the average subscriptions for each month by adding the beginning and ending subscriptions for the month and dividing by two. We calculate Average MSO Households for the period by adding the average households for each month and dividing by the number of months in the period. We calculate the average households for each month by adding the beginning and ending households for the month and dividing by two. We are not aware of any uniform standards for defining subscriptions or households and caution that our presentation may not be consistent with that of other companies. Additionally, the fees that our MSOs pay us are typically based upon a specific contractual definition of a subscriber, subscription, household or a TiVo-enabled device which may not be consistent with how we define a subscription or household for our reporting purposes nor be representative of how such fees are calculated and paid to us by our MSOs. Our MSO Subscription and MSO Household data is dependent in part on reporting from our third-party MSO partners.
TiVo-Owned Churn Rate | Three Months Ended | |||||||||||||||
(Subscriptions in thousands) | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | ||||||||
Average TiVo-Owned subscriptions | 962 | 947 | 943 | 944 | 935 | 930 | 946 | 961 | ||||||||
TiVo-Owned subscription cancellations | (41 | ) | (41 | ) | (40 | ) | (39 | ) | (43 | ) | (45 | ) | (47 | ) | (41 | ) |
TiVo-Owned Churn Rate per month | (1.4 | )% | (1.4 | )% | (1.4 | )% | (1.4 | )% | (1.5 | )% | (1.6 | )% | (1.6 | )% | (1.4 | )% |
TiVo-Owned Churn Rate per Month. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our ability to retain existing TiVo-Owned Subscriptions (including both monthly and product lifetime subscriptions) by providing services that are competitive in the market. Management believes factors such as service enhancements, service commitments, higher customer satisfaction, and improved customer support may improve this metric. Conversely, management believes factors such as increased competition, lack of competitive service features such as high definition television recording capabilities in our older model DVRs or access to certain digital television channels or MSO Video On Demand services, as well as increased price sensitivity, CableCARDTM installation issues, and CableCARDTM technology limitations, may cause our TiVo-Owned Churn Rate per month to increase.
We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned Subscription cancellations in the period divided by the Average TiVo-Owned Subscriptions for the period (including both monthly and product lifetime subscriptions), which then is divided by the number of months in the period. We calculate Average TiVo-Owned Subscriptions for the period by adding the average TiVo-Owned Subscriptions for each month and dividing by the number of months in the period. We calculate the average TiVo-Owned Subscriptions for each month by adding the beginning and ending subscriptions for the month and dividing by two. We are not aware of any uniform standards for calculating churn and caution that our presentation may not be consistent with that of other companies.
Three Months Ended | ||||||||||||||||||||||||
Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | |||||||||||||||||
(In thousands, except SAC) | ||||||||||||||||||||||||
Subscription Acquisition Costs | ||||||||||||||||||||||||
Sales and marketing, subscription acquisition costs | $ | 5,209 | $ | 3,612 | $ | 1,117 | $ | 1,691 | $ | 3,455 | $ | 2,734 | $ | 1,212 | $ | 1,505 | ||||||||
Hardware revenues | (21,362 | ) | (29,506 | ) | (20,358 | ) | (22,314 | ) | (22,463 | ) | (30,366 | ) | (25,232 | ) | (21,058 | ) | ||||||||
Less: MSOs'-related hardware revenues | 14,788 | 23,909 | 16,271 | 17,298 | 15,467 | 23,997 | 20,234 | 15,896 | ||||||||||||||||
Cost of hardware revenues | 23,994 | 30,837 | 20,185 | 22,571 | 25,041 | 28,176 | 22,524 | 19,764 | ||||||||||||||||
Less: MSOs'-related cost of hardware revenues | (13,355 | ) | (19,355 | ) | (12,625 | ) | (13,712 | ) | (12,475 | ) | (18,973 | ) | (14,805 | ) | (11,961 | ) | ||||||||
Total Acquisition Costs | $ | 9,274 | $ | 9,497 | $ | 4,590 | $ | 5,534 | $ | 9,025 | $ | 5,568 | $ | 3,933 | $ | 4,146 | ||||||||
TiVo-Owned Subscription Gross Additions | 60 | 52 | 37 | 39 | 59 | 36 | 27 | 32 | ||||||||||||||||
Subscription Acquisition Costs (SAC) | $ | 155 | $ | 183 | $ | 124 | $ | 142 | $ | 153 | $ | 155 | $ | 146 | $ | 130 | ||||||||
Subscription Acquisition Cost or SAC. Management reviews this metric, and believes it may be useful to investors, in order to evaluate trends in the efficiency of our marketing programs and subscription acquisition strategies. We define SAC as our total TiVo-Owned acquisition costs for a given period divided by TiVo-Owned Subscription gross additions for the same period. We define total acquisition costs as sales and marketing, subscription acquisition costs less net TiVo-Owned related hardware revenues (defined as TiVo-Owned related gross hardware revenues less revenue share and market development funds paid to retailers) plus TiVo-Owned related cost of hardware revenues. The sales and marketing, subscription acquisition costs line item includes advertising expenses and promotion-related expenses directly related to subscription acquisition activities, but does not include expenses related to advertising sales. We do not include third-parties’ subscription gross additions, such as MSOs' gross additions with TiVo subscriptions, in our calculation of SAC because we typically incur limited or no acquisition costs for these new subscriptions, and so we also do not include MSOs’ sales and marketing, subscription acquisition costs, hardware revenues, or cost of hardware revenues in our calculation of TiVo-Owned SAC. We are not aware of any uniform standards for calculating total acquisition costs or SAC and caution that our presentation may not be consistent with that of other companies.
TiVo-Owned Average Revenue Per Subscription or ARPU. Management reviews this metric, and believes it may be useful to investors in order to evaluate the potential of our subscription base to generate service revenues. Investors should not use ARPU as a substitute for measures of financial performance calculated in accordance with GAAP. Management believes it is useful to consider this metric excluding the costs associated with rebates, revenue share, and other payments to channel because of the discretionary and varying nature of these expenses and because management believes these expenses, which are included in hardware revenues, net, are more appropriately monitored as part of SAC. We are not aware of any uniform standards for calculating ARPU and caution that our presentation may not be consistent with that of other companies.
We calculate TiVo-Owned service revenues by subtracting MSOs'-related service revenues and Media services and other service revenues (includes Advertising, Research, Cubiware revenues, and Digitalsmiths' revenues), from our total reported net Service and Software revenues. The table below provides a more detailed breakdown of our Service and Software revenues, and reconciles to our total Service and Software revenues in our Statement of Operations as reported (or previously reported):
Three Months Ended | ||||||||||||||||||||||||
Service and Software Revenues | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
TiVo-Owned-related service revenues | $ | 20,068 | $ | 20,508 | $ | 20,945 | $ | 21,047 | $ | 21,541 | $ | 21,810 | $ | 22,388 | $ | 22,510 | ||||||||
MSOs'-related service revenues | 19,824 | 16,942 | 15,285 | 14,078 | 13,675 | 10,563 | 10,328 | 9,950 | ||||||||||||||||
Media services and other service and software revenues | 7,665 | 7,224 | 6,868 | 4,724 | 5,282 | 4,332 | 4,193 | 3,435 | ||||||||||||||||
Total Service and Software Revenues | $ | 47,557 | $ | 44,674 | $ | 43,098 | $ | 39,849 | $ | 40,498 | $ | 36,705 | $ | 36,909 | $ | 35,895 | ||||||||
We calculate ARPU per month for TiVo-Owned Subscriptions by taking total reported net TiVo-Owned service revenues and dividing the result by the number of months in the period. We then divide the resulting average service revenue by Average TiVo-Owned Subscriptions for the period, calculated as described above for churn rate. The following table shows this calculation:
Three Months Ended | ||||||||||||||||||||||||
TiVo-Owned Average Revenue per Subscription | Jan 31, 2016 | Oct 31, 2015 | Jul 31, 2015 | Apr 30, 2015 | Jan 31, 2015 | Oct 31, 2014 | Jul 31, 2014 | Apr 30, 2014 | ||||||||||||||||
(In thousands, except ARPU) | ||||||||||||||||||||||||
TiVo-Owned-related service revenues | $ | 20,068 | $ | 20,508 | $ | 20,945 | $ | 21,047 | $ | 21,541 | $ | 21,810 | $ | 22,388 | $ | 22,510 | ||||||||
Average TiVo-Owned revenues per month | 6,689 | 6,836 | 6,982 | 7,016 | 7,180 | 7,270 | 7,463 | 7,503 | ||||||||||||||||
Average TiVo-Owned subscriptions per month | 962 | 947 | 943 | 944 | 935 | 930 | 946 | 961 | ||||||||||||||||
TiVo-Owned ARPU per month | $ | 6.95 | $ | 7.22 | $ | 7.40 | $ | 7.43 | $ | 7.68 | $ | 7.82 | $ | 7.89 | $ | 7.81 | ||||||||
The decrease in TiVo-Owned ARPU per month for the fourth quarter and fiscal year ended January 31, 2016 as compared to the same prior year periods, was due primarily to a percentage increase in TiVo Mini sales bundled with product lifetime service, which have much lower average service revenues than DVRs.
Technology Revenues. Revenue and cash under our licensing agreements with EchoStar, AT&T, Verizon, and Cisco and Google/Motorola Mobility through January 31, 2016 have been:
Licensing Related Technology Revenues | Cash Received | |||||
Fiscal Year Ended January 31, | (In thousands) | |||||
2012 | $ | 35,275 | $ | 117,679 | ||
2013 | 77,340 | 86,855 | ||||
2014 | 141,583 | 469,776 | ||||
2015 | 179,271 | 93,209 | ||||
2016 | 181,591 | 87,591 | ||||
Total | $ | 615,060 | $ | 855,110 | ||
Based on current GAAP, revenue and cash from the contractual minimums (i.e. the following amounts do not include any additional revenues from our AT&T or Verizon agreements) under all our licensing agreements with EchoStar, AT&T, Verizon, and Cisco and Google/Motorola Mobility are expected to be recognized (revenues) and received (cash) on an annual basis for the fiscal years as follows:
Licensing Related Technology Revenues | Minimum Cash Due | |||||
(In thousands) | ||||||
Fiscal Year Ending January 31, | ||||||
2017 | $ | 173,129 | $ | 89,595 | ||
2018 | 174,411 | 83,579 | ||||
2019 | 88,629 | 31,139 | ||||
2020 | 1,855 | — | ||||
2021 | 1,855 | — | ||||
2022 - 2024 | 4,483 | — | ||||
Total | $ | 444,362 | $ | 204,313 | ||