TiVo Announces Significant Revenue Growth for Quarter Ending January 31, 2006; Annual Service and Technology Revenues up 48 Percent Compared to Last Year
• Total subscription base grows to approximately 4.4 million, which represents 45 percent annual growth
• Annual net loss improvement of 57 percent compared to last year
• First fiscal year of positive cash flow from operations
• TiVo announces new pricing initiative, partnership with Verizon Wireless for mobile programming and TiVo® KidZone, a new programming tool
• TiVo announces distribution agreement with RadioShack
ALVISO, Calif. – March 8, 2006 – TiVo Inc. (NASDAQ: TIVO), the creator of and a leader in television services for digital video recorders (DVRs), today reported financial results for the fourth quarter and fiscal year ended January 31, 2006.
Total subscriptions as of January 31, 2006, were approximately 4.4 million, which represents 45% growth in the subscription base during the past year. Service and technology revenues for the year increased 48% to $170.9 million, compared to $115.5 million last year. Service and technology revenues for the quarter increased 37% to $47.0 million, compared to $34.2 million for the same period last year.
TiVo achieved its first positive cash flow from operations in fiscal 2006. For the year, TiVo reported a net loss of ($34.4) million and net loss per share of ($0.41), a 57% and 59% improvement respectively, compared to a net loss of ($79.8) million, or ($0.99) per share in fiscal 2005. For the fourth quarter, TiVo reported a net loss of ($19.5) million and net loss per share of ($0.23), a 42% and 45% improvement respectively, compared to a net loss of ($33.7) million, or ($0.42) per share, for the fourth quarter of last year.
TiVo-Owned subscription gross additions were 221,000 for the quarter, compared to 276,000 in the fourth quarter of last year. This fiscal fourth quarter was the second best quarter in TiVo’s history in terms of TiVo-Owned subscription net additions. TiVo-Owned subscription net additions were 183,000 compared to 251,000 in the fourth quarter of last year. These numbers represent a decline compared to last year, reflective of the more challenging competitive environment. However, the fourth quarter results also suggest an improvement in year-over-year trends. In terms of sequential quarter-over-quarter percentage growth, this year represented a significant improvement over last year, showing early traction from TiVo’s new marketing programs. Separately, as expected, TiVo added 173,000 DIRECTV subscriptions in the quarter, compared to 379,000 in the third quarter of fiscal 2006.
Tom Rogers, CEO of TiVo, said “This was a steady quarter for TiVo as our subscription base continued to grow, even in this more competitive environment. During the last six months, we have implemented a number of marketing programs designed to support our long-term goal of driving increased scale in our subscription base. We are starting to see the results of these programs as the fourth quarter was our best on-line quarter ever through TiVo.com. In addition, virtually all new subscriptions during the quarter signed on for a minimum 1-year period, helping to further reduce our already comparatively low churn rate.”
“One of the key ways to drive our subscription base is to continue to differentiate TiVo’s service features from those of generic DVRs, which is an important driving force for us in 2006. Along those lines, we have just introduced a groundbreaking way for parents to supervise television in the home with all the simplicity that the TiVo service has come to be known for. TiVo has stepped in to solve an age old problem in the children’s television arena with the support of the largest children’s television groups in the country, Common Sense Media and The Parents Television Council.”
“As the pioneer in the DVR market, we continue to blaze the trail by providing our subscribers with unique content and programming features like TiVo® KidZone, TiVoToGo, Advertising Search and the Yahoo! partnerships for TV scheduling, traffic, and photo distribution, which will continue to separate the TiVo service as a best of breed product.”
“In addition, as demonstrated by the Verizon Wireless announcement earlier this week, and a number of device integration initiatives made in the fourth quarter including the updated capability in our TiVoToGo feature to transfer TV shows to portable devices including the Sony PSP and our work with Intel to seamlessly integrate content from TiVo units with Intel’s Viiv platform. TiVo is demonstrating that it is a central point of integration in the home with other digital devices and services,” concluded Rogers.
== Fourth Quarter Highlights ==
TiVo announces pricing change
Concurrent with this earnings release, TiVo announced new, simplified pricing structures that make it easier for consumers to add TiVo to their home entertainment options. TiVo developed the new pricing structure after completing several months of market research among new and existing TiVo subscriptions and extensively testing the pricing options in the marketplace.
For the first-time ever, through TiVo’s direct sales channel, customers will be able to bundle together the purchase of their TiVo 80-hour Series2 box and TiVo service at an all-in-one price, based on a one-, twoor three year commitment at $19.95 a month or $224 prepaid, $18.95 a month or $369 prepaid, and $16.95 a month or $469 prepaid, respectively. The changes to the pricing structure will launch next week and will not affect TiVo’s current subscription base.
As part of the announcement, TiVo is also announcing an update to its service-only options, providing consumers that purchase a TiVo unit at a retail outlet with the option to purchase their TiVo service based on one-, two- or three-year commitments upfront. The lifetime service agreement option will be eliminated.
TiVo announces distribution agreement with RadioShack
TiVo is pleased to announce RadioShack as a new distribution partner. RadioShack’s track record in selling service related products and solutions make them an ideal partner for TiVo. Their appeal to the family oriented consumer creates a compelling partner to promote TiVo® KidZone this year. In addition, TiVo® KidZone was an important factor in RadioShack’s decision to distribute TiVo units.
TiVo and Verizon Wireless partner to take TiVo to mobile phones
TiVo and Verizon Wireless announced earlier this week an agreement that will allow Verizon to debut the new TiVo Mobile, a new downloadable application that lets TiVo service subscribers schedule recordings on their TiVo device directly from their Get It Now equipped Verizon mobile handset.
TiVo Mobile is a new innovation that allows TiVo subscribers to schedule DVR recordings and access related entertainment information from the convenience of their mobile handset. Viewers can schedule recordings on the go via a similar user interface that makes TiVo the best-in-class DVR experience. This service will be launched later this year.
The new TiVo® KidZone gives parents powerful combination of expert guidance with unprecedented control
Last week, TiVo announced plans to enable parents to more easily find and display quality programming for their children that reflects their family’s values and interests by tackling this problem head-on with the introduction of TiVo® KidZone, a groundbreaking solution for the children’s television dilemma.
TiVo KidZone offers a first-of-its-kind solution, provides parents expert guidance and easy set-up to help them find and choose the television programming that is most appropriate for their family based on the individual needs and values of their household. As part of this initiative, TiVo is partnering with leading parenting and family groups including Common Sense Media and the Parents Television Council, the two largest grass roots organizations, with 4 million members between them, to create entire menus of recommended programming automatically provided right to the television set. Moreover, a child is able to use the television set to enjoy these selections and other parent-approved programming, while parents can still use the TiVo service to automatically record their viewing selections and enjoy their favorites when they are ready to watch. In doing so, TiVo is offering the first real answer to the 50 year-old question of how to create the ideal television environment for children in their own homes.
TiVo KidZone will be included as part of the standard TiVo® service and is scheduled to begin rolling out by mid-year to all new and existing subscribers with a TiVo® Series2™ box.
Management Provides Financial Guidance
For the first quarter of fiscal 2007, TiVo anticipates service and technology revenues in the range of $48 million to $50 million and a net loss of $(19) million to $(22) million. This expected loss includes the anticipated effects of expensing options, increased costs resulting from TiVo’s on-going patent litigation, the higher marketing spending driven by the impact of new pricing models announced today, and a potential expense for a change in accounting policy associated with the rollout of these new pricing models.
This financial guidance is based on information available to management as of March 8, 2006. TiVo expressly disclaims any duty to update this guidance.
Conference Call, Slide Presentation and Webcast
TiVo will host a conference call and webcast to discuss fourth quarter and fiscal year 2006 financial and operating results and guidance outlook at 2:00 pm PT (5:00 pm ET), today, March 8, 2006. To listen to the discussion and view the accompanying slides, please visit www.tivo.com/ir and click on the link provided for the webcast or dial 913-981-4910 no password required. The webcast will be archived and available through April 7, 2006 at www.tivo.com/ir or by calling 719-457-0820 and entering the conference ID number 4914733. The accompanying slides are also available as an exhibit to TiVo’s Current Report on Form 8-K, Item 2.02, filed March 8, 2006.
About TiVo Inc.
Founded in 1997, TiVo (NASDAQ: TIVO) pioneered a brand new category of products with the development of the first commercially available digital video recorder (DVR). Sold through leading consumer electronic retailers, TiVo has developed a brand which resonates boldly with consumers as providing a superior television experience. Through agreements with leading satellite and cable providers, TiVo also integrates its full set of DVR service features into the set-top boxes of mass distributors. TiVo’s DVR functionality and ease of use, with such features as Season Pass™ recordings and WishList® searches, has elevated its popularity among consumers and has created a whole new way for viewers to watch television. With a continued investment in its patented technologies, TiVo is revolutionizing the way consumers watch and access home entertainment. Rapidly becoming the focal point of the digital living room, TiVo’s DVR is at the center of experiencing new forms of content on the TV, such as broadband delivered video, music and photos. With innovative features, such as TiVoToGo™ and online scheduling, TiVo is expanding the notion of consumers experiencing “TiVo, TV your way.®” The TiVo® service is also at the forefront of providing innovative marketing solutions for the television industry, including a unique platform for advertisers and audience measurement research. The Company is based in Alviso, California.
TiVo, Season Pass, WishList, Series2, TiVoToGo, ‘TiVo, TV your way.’ and the TiVo Logo are trademarks or registered trademarks of TiVo Inc. worldwide. © 2006 TiVo Inc. All rights reserved.
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, TiVo’s business, services, financial statements, and future product strategy. Forwardlooking statements generally can be identified by the use of forward-looking terminology such as, “believe,” “expect,” “may,” “will,” “intend,” “estimate,” “continue,” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in development, competitive service offerings and lack of market acceptance, as well as the other potential factors described under “Factors That May Affect Future Operating Results” in the Company’s public reports filed with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2005, and the Quarterly Reports on Form 10-Q for the quarters ended April 30, 2005, July 31, 2005 and October 31, 2005. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo disclaims any obligation to update these forward-looking statements.
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