Stock Earnings Analysis: TiVo Inc. (NASDAQ:TIVO)

TiVo Inc. (NASDAQ:TIVO) reported earnings for the three months ended April 2016 on May 31, 2016. The company earned $0.04 per share on revenue of $99.71M. Analysts had been modeling earning per share of $0.08 with $99.56M in revenue.

TiVo Inc. (NASDAQ:TIVO) reported financial results for the first quarter ended April 30, 2016.

Q1 Highlights

  • Total TiVo subscriptions now over 7 million, up 24% versus last year; includes 312,000 MSO and 3,000 TiVo-Owned net additions in the first quarter
  • First quarter Service and Software & Technology revenue of $99.7 million, an increase of 8% year-over-year
  • Operator-related service and software revenue increased 44% year-over-year
  • First quarter net income was $4.2 million; includes $5.2 million in Rovi transaction costs and $3.7 million in restructuring expenses partially offset by a $3.2 million tax benefit from those items
  • First quarter Adjusted EBITDA was $32.1 million
  • Entered into agreement to be acquired by Rovi at 40% premium to TiVo’s unaffected closing price on March 23rd; Creates $3 billion software, services, and data provider for the evolving entertainment ecosystem.

Transaction with Rovi

The transaction with Rovi, announced on April 29, continues to move forward as planned. Pending required approvals, the transaction is expected to close in the third calendar quarter of this year. As discussed in the transaction announcement, the combination with Rovi offers a sound strategic rationale, including:

  • The creation of the market’s largest entertainment software provider with over 500 operator, consumer electronic, and content owner relationships;
  • Clear opportunities to combine product offerings and create end-to-end solutions for service provider partners, which will integrate and bundle software, cloud services, metadata, advertising, and analytics;
  • Significantly enhanced R&D capabilities, leveraging TiVo’s consumer DNA across an even broader group of products and customers;
  • Highly meaningful financial benefits including a $100M+ in annual cost synergies and calendar year 2016 Pro forma revenue of $780M to $830M with ~40% Adjusted EBITDA margins1.

Revenue

Service and software & technology revenue for the First Quarter of Fiscal Year 2017 was $99.7 million, an 8% increase from $92.4 million in the First Quarter of 2016. This growth was driven by a year-over-year increase of 44% in our Operator-related service and software revenue and strong double-digit growth in our data and analytics business, which had record revenue. This growth was offset in part by lower year-over-year TiVo-Owned and IP revenues.

Net Income

For the First Quarter of 2017, GAAP Net Income was $4.2 million and included non-recurring restructuring costs of $3.7 million and Rovi transaction expenses of $5.2 million offset by a $3.2 million tax benefit from restructuring and Rovi transaction costs. This compared to GAAP Net Income of $9.1 million in the year-ago quarter.

Non-GAAP Net Income grew 33% to $12.1 million compared to $9.1 million in the year-ago quarter. Non-GAAP Net Income excludes restructuring costs, Rovi transaction expenses as well as amortization and earn-outs related to the Cubiware acquisition.

TiVo Inc. earnings per share showed a decreasing trend of -6.9% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 64%.Analysts project EPS growth over the next 5 years at 15.2%. It has EPS annual growth over the past 5 fiscal years of 18.2% when sales grew 17.4. It reported -6.5% sales drop, and -47.9% EPS decline in the last quarter.

The stock is trading at $10.15, up 39.23% from 52-week low of $7.29. The stock trades down -5.84% from its peak of $10.78 and 18.03% above the consensus price target of $11.98. Its volume clocked up at 0.46 million shares which is lower than the average volume of 2.32 million shares. Its market capitalization currently stands at $999.02M.

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