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 TiVo Reports 17% EPS Growth on Record Service and Technology Revenueand Continued Subscription Growth for the First Quarter Ended April30, 2015
   Tuesday, May 26, 2015 4:04:07 PM ET

TiVo Inc. (TIVO )

--  Diluted EPS of $0.08, up 17% relative to the year-ago quarter
--  Total TiVo subscriptions now approximately 5.8 million, up 27%
    year-over-year
--  Record Service and technology revenues of $92.4 million in the first
    quarter, an increase of 7% year-over-year, exceeding guidance; driven
    by strong year-over-year growth in MSO and Digitalsmiths’ service
    revenue
--  MSO service revenue grew 41% year-over-year; Significant progress with
    existing distribution relationships; extended partnership with Virgin
    Media; Vodafone Spain bundling ONO television service powered by the
    cloud-based TiVo platform to its mobile customers
--  Adjusted EBITDA of $29.0 million, in line with the high-end of
    guidance
--  Net Income of $7.9 million, in line with the high-end of guidance;
    included $1.8 million of interest expense, net of tax, that related to
    the convertible notes issued in September 2014, without which, current
    quarter net income would have increased by $1.6 million relative to
    year-ago quarter
--  Positive TiVo-Owned net additions resulted in the best first quarter
    net addition performance in eight years; while gross additions of
    39,000 were up 22% year-over-year
--  Announced the acquisition of Cubiware, to expand to emerging Pay TV
    markets as well as expanding services for international operators in
    other markets
--  TiVo software to be integrated into ARRIS set-top boxes; TiVo now
    working with all major global set-top box providers

TiVo Inc. (TIVO ), a leader in the advanced television entertainment market, today reported financial results for the first quarter ended April 30, 2015.

Tom Rogers, President and CEO of TiVo, said, "Our operational and financial performance this quarter represented a strong start to Fiscal 2016. Service & Technology Revenue exceeded guidance and Adjusted EBITDA and Net Income came in at the top-end of our guidance. Service Revenue was up 11% year-over-year, driven by a 41% increase in MSO service revenue and almost doubling Digitalsmiths’ service revenue. Our innovative products continue to gain global reach across both the retail and operator communities with total subscriptions now at approximately 5.8 million, a 27% improvement over last year and a 132% increase over where we stood at the end of the first quarter of Fiscal 2013. During the quarter, we continued to add MSO subscriptions at a rapid pace and delivered the best first quarter of TiVo-Owned net subscription additions in eight years, driving positive net subscription additions.

"As we look to the remainder of the year and beyond, the successful completion of critical initiatives including the extension of our agreement with Virgin Media, the broadening of our international opportunity through the acquisition of Cubiware, and numerous others, has positioned us at the forefront of the evolving media landscape. As a result, we believe we are well placed to drive strong long-term operating and financial results, to invest in innovation to build on our solid competitive position, and to drive shareholder value through our buyback authorization."

For the first quarter, service and technology revenues were $92.4 million. This compared to guidance of $90 million to $92 million and $86 million for the same quarter last year. TiVo reported Adjusted EBITDA of $29.0 million, compared to Adjusted EBITDA guidance of $26 million to $29 million, and compared to Adjusted EBITDA of $26.9 million in the same quarter last year. Net income was $7.9 million, compared to guidance of $5 million to $8 million and net income of $8.1 million in the same quarter last year. This quarter included $1.8 million of tax affected interest expense for the convertible notes issued in September 2014, which was not included in the year-ago quarter. Excluding the additional interest expense, net income would have been up almost 20% year over year. Diluted EPS was $0.08, compared to $0.07 in the first quarter last year. Additionally, the Company has now repurchased $266 million since it instituted its $550 million share repurchase program, including $20 million during the first quarter. $284 million or approximately 27 million shares (based on the current stock price) remains on the share repurchase authorization.

Rogers continued, "Our operator efforts are producing solid results. We have 4.8 million operator subscriptions, having added more than 1.2 million since the first quarter of last year, and 285,000 this past quarter. The 34% year-over-year increase in MSO subscriptions translated into 41% year-over-year MSO service revenue growth, which is an acceleration over last quarter’s year-over-year growth rate of 30%.

"Further, in April, we extended our deal with Virgin Media, and as part of the new agreement, Virgin Media has committed to the development of next-generation solutions from TiVo. In Spain, the ONO television offering powered by TiVo is now being marketed by Vodafone as a bundled package to mobile customers, highlighting the valuable role that we play in helping Vodafone with its quad-play strategy, and ultimately, in growing its business.

"Additionally, we are seeing increasing momentum and contribution from our North America operator partners, which represented 48% of our total new MSO subscription additions in the first quarter, the highest it has ever been. Cogeco launched the TiVo product in its Quebec market and early results are promising. This launch was important as it was the first time the TiVo software has included bilingual capabilities, which is something we believe can help as we look to expand distribution in Canada as well as other regions where this is a necessary capability.

"Turning back to our international efforts for a moment: we made an important announcement today regarding the acquisition of Cubiware -- a provider of cost-effective middleware solutions for international cable, satellite, and IPTV operators. This acquisition significantly expands our international presence with almost 40 operators across 25 countries, including key operators like Columbus Communications (part of Cable & Wireless) and Cablemas (part of Televisa) in Latin America, arms us with a more cost effective product offering for these new markets and product categories, and helps us expand into emerging markets. We believe this acquisition will enable us to address a larger portion of the global Pay TV market which is expected to grow to over one billion subscribers by 2020. We anticipate that Cubiware will accelerate the growth of our operator business and will be accretive to current fiscal year Adjusted EBITDA.

"Further enhancing our operator business, we recently announced that the TiVo software experience and cloud-based products will be integrated into ARRIS set-top box hardware. This deal means that TiVo now works with many of the largest global set-top box providers, including ARRIS, Cisco, Pace, and Samsung.

"Sales of our Digitalsmiths’ products and services roughly doubled year-over-year. In the first quarter, we made significant progress with existing partners as we rolled out on the new Foxtel set-top box platform and saw a significant acceleration of our deployment with Time Warner Cable. We expect this growth to continue as we drive further penetration within existing distribution partners, sign additional distribution deals in the future, and bring new products to market.

"In regards to the TiVo-Owned business, we continue to see an improving trajectory. For the first time in eight years, we saw positive net additions in the first quarter, and a 22% year-over-year increase in gross additions. These results were driven by the value that consumers are placing on the TiVo multi-screen advanced television proposition, our continued product innovation, as well as the impact of the TiVo OTA product. More specifically on our OTA product, we have the ability to meet the needs of an increasing number of consumers who want to put together their own bundle of an OTA DVR and streaming services like Hulu and Netflix. To the extent that the market moves more aggressively in that direction, our OTA product is well positioned and will be a larger contributor to our growth over time.

"In our TiVo Research business, we are beginning to take advantage of the rapid growth of programmatic television ad spending by integrating our unique data feeds into programmatic marketplaces. Many industry experts have programmatic ad spending growing significantly from current levels and we believe that we are well situated to take advantage of that growth. We’re seeing some early traction as well. We’ve grown our revenue meaningfully in the programmatic area through our relationships with industry players like Datalogix and clypd, with a significant amount of others in the pipeline. As we look forward, we believe that our programmatic efforts could drive further meaningful growth in our research business, especially given the discussions we are having with programmatic data buyers and sellers to integrate our data into the buying and selling process to capture a portion of the programmatic ad revenue, as opposed to solely trying to sell a research product, which has lower growth potential."

Rogers concluded, "We are pleased with our first quarter results. We expect the trends we are seeing to define our success for the remainder of the year. We believe that our technology leadership position in the television operator industry and our execution on our strategic business plan will convert into further acceleration from our MSO business and increasing contribution from Digitalsmiths’ products and services. We also expect to see significant new opportunities for our audience research and measurement products and services as the demand for targeted data continues to increase. In addition, these trends should include continued improvement in our retail business as well as continued cost and capital structure improvements. We expect these trends to have a positive impact on TiVo’s revenue and Adjusted EBITDA growth going forward."

Management Provides Financial Guidance

For the second quarter of Fiscal Year 2016, TiVo anticipates service and technology revenues in the range of $94 million to $97 million. TiVo expects Adjusted EBITDA to be in the range of $29 million to $32 million and net income to be in the range of $7 million to $10 million.

Included in the second quarter financial guidance is expected sequential growth in the Company’s MSO service revenue, higher non-IP technology revenue and flat TiVo-Owned service revenues from the first quarter as well as slightly lower operating expenses. Additionally, TiVo anticipates lower hardware revenue compared to the first quarter due to the continuing trend of MSO partners opting for the TiVo service on third-party hardware.

Management’s guidance includes Adjusted EBITDA, a non-GAAP financial measure as defined in Regulation G. TiVo has provided a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) in the attached schedules solely for the purpose of complying with Regulation G and not as an indication that EBITDA or Adjusted EBITDA is a substitute measure for net income (loss).

Conference Call and Webcast

TiVo will host a conference call and Webcast to discuss the first quarter ended April 30, 2015 financial and operating results as well as guidance outlook for the second quarter at 2:00 pm PT (5:00 pm ET), today, May 26, 2015. To listen to the discussion, please visit http://www.tivo.com/ir and click on the link provided for the Webcast or dial (877) 618-4505 (conference ID number is 45773223). The Webcast will be archived and available through June 3, 2015 at http://www.tivo.com/ir or by calling (404) 537-3406; and entering the conference ID number 45773223.

About TiVo Inc.

TiVo Inc. (TIVO ) is a global leader in next-generation television services. TiVo’s innovative cloud-based Software-as-a-Service solutions enable viewers to consume content across all screens in and out-of-the home, providing an all-in-one approach for navigating the ’content chaos’ by seamlessly combining live, recorded, on-demand and over-the-top television into one intuitive user interface. The TiVo experience provides TV viewers with simple universal search, discovery, viewing and recording from any device, creating the ultimate viewing experience. TiVo products and services are available at retail or through a growing number of Pay TV operators world-wide. TiVo’s multiple subsidiary companies provide the broader television industry and consumer electronics manufacturers, cloud-based video discovery and recommendation options, interactive advertising solutions and audience research and measurement services. More information at: www.TiVo.com.

TiVo, the TiVo logo, WishList, Season Pass, Roamio, Media TRAnalytics and The Right Audience are trademarks or registered trademarks of TiVo Inc. or its subsidiaries. All other trademarks are the property of their respective owners.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, TiVo’s future business and growth strategies including future distribution agreements as well as revenue and subscription growth from MSO customers (both domestically and internationally), financial guidance for TiVo’s second quarter and full fiscal year ending January 31, 2016, future growth in TiVo’s overall subscription base including both TiVo-Owned and MSO subscriptions, future growth in TiVo’s retail business, future revenues, products, and distribution deals from Digitalsmiths, future revenues and growth from TiVo audience research and measurements products and services, future expansion of TiVo’s products to emerging markets and to new product categories for MSO customers through the acquisition of Cubiware, TiVo’s expectation that Cubiware will help to accelerate growth of TiVo’s operator business and be accretive to TiVo’s current fiscal year Adjusted EBITDA, and future capital allocation initiatives including the amount, timing and sufficient availability of shares in the marketplace for future share repurchases. Forward-looking 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 "Risk Factors" in the Company’s public reports filed with the Securities and Exchange, including the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015, and Current Reports on Form 8-K. 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.


                                 TIVO INC.
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (In thousands, except per share and share amounts)
                                (unaudited)

                                               Three Months Ended April 30,
                                               ----------------------------
                                                    2015           2014
                                               -------------  -------------
Revenues
    Service revenues                                  39,849         35,895
    Technology revenues                               52,571         50,106
    Hardware revenues                                 22,314         21,058
                                               -------------  -------------
Net revenues                                         114,734        107,059
Cost of revenues
    Cost of service revenues                          15,439         13,850
    Cost of technology revenues                        6,136          4,544
    Cost of hardware revenues                         22,571         19,764
                                               -------------  -------------
  Total cost of revenues                              44,146         38,158
        Gross margin                                  70,588         68,901
                                               -------------  -------------
    Research and development                          25,014         26,347
    Sales and marketing                               10,941         10,315
    Sales and marketing, subscription
     acquisition costs                                 1,691          1,505
    General and administrative                        14,822         15,354
                                               -------------  -------------
      Total operating expenses                        52,468         53,521
        Income from operations                        18,120         15,380
                                               -------------  -------------
    Interest income                                      885          1,144
    Interest expense and other expense, net           (4,834)        (1,976)
                                               -------------  -------------
      Income before income taxes                      14,171         14,548
      Provision for income taxes                      (6,292)        (6,424)
                                               -------------  -------------
    Net income                                 $       7,879  $       8,124
                                               =============  =============

    Net income per common share
        Basic                                  $        0.09  $        0.07
        Diluted                                $        0.08  $        0.07

    Income for purposes of computing net income
     per share:
        Basic                                  $       7,879  $       8,124
        Diluted                                $       9,130  $       9,375

    Weighted average common and common
     equivalent shares:
        Basic                                     91,454,492    113,381,677
        Diluted                                  110,544,699    133,204,128



                                 TIVO INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS
             (In thousands, except per share and share amounts)
                                (unaudited)

                                                 April 30,     January 31,
                                                    2015           2015
                                               -------------  -------------
                     ASSETS
CURRENT ASSETS
  Cash and cash equivalents                    $     145,888  $     178,217
  Short-term investments                             540,411        564,744
  Accounts receivable, net of allowance for
   doubtful accounts of $593 and $647,
   respectively                                       39,144         40,184
  Inventories                                         22,417         20,341
  Deferred cost of technology revenues, current        5,799          5,076
  Deferred tax asset, current                         49,463         55,787
  Prepaid expenses and other, current                 11,746         13,851
                                               -------------  -------------
    Total current assets                             814,868        878,200
LONG-TERM ASSETS
  Property and equipment, net of accumulated
   depreciation of $53,615 and $52,021,
   respectively                                       11,674         11,854
  Intangible assets, net of accumulated
   amortization of $33,419 and $31,277,
   respectively                                       50,668         51,810
  Deferred cost of technology revenues, long-
   term                                               14,145         15,016
  Deferred tax asset, long-term                      114,486        114,486
  Goodwill                                            99,364         99,364
  Prepaid expenses and other, long-term               10,567          6,791
                                               -------------  -------------
    Total long-term assets                           300,904        299,321
                                               -------------  -------------
      Total assets                             $   1,115,772  $   1,177,521
                                               =============  =============
      LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
  CURRENT LIABILITIES
  Accounts payable                             $      24,026  $      29,359
  Accrued liabilities                                 39,267         54,431
  Deferred revenue, current                          168,844        175,503
  Convertible senior notes, current                  172,500             --
                                               -------------  -------------
    Total current liabilities                        404,637        259,293
  LONG-TERM LIABILITIES
  Deferred revenue, long-term                        228,047        255,816
  Convertible senior notes, long-term                181,601        352,562
  Other long-term liabilities                            521            537
                                               -------------  -------------
    Total long-term liabilities                      410,169        608,915
                                               -------------  -------------
      Total liabilities                              814,806        868,208
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
  Preferred stock, par value $0.001: Authorized
   shares are 10,000,000; Issued and
   outstanding shares - none                              --             --
  Common stock, par value $0.001: Authorized
   shares are 275,000,000; Issued shares are
   142,041,432 and 138,577,153, respectively,
   and outstanding shares are 97,090,545 and
   96,221,867, respectively                              141            138
  Treasury stock, at cost: 44,950,887 and
   42,355,286 shares, respectively                  (542,764)      (514,853)
  Additional paid-in capital                       1,215,389      1,203,722
  Accumulated deficit                               (371,801)      (379,680)
  Accumulated other comprehensive income (loss)            1            (14)
                                               -------------  -------------
      Total stockholders’ equity                     300,966        309,313
                                               -------------  -------------
      Total liabilities and stockholders’
       equity                                  $   1,115,772  $   1,177,521
                                               =============  =============



                                 TIVO INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
                                (unaudited)

                                               Three Months Ended April 30,
                                               ----------------------------
                                                    2015           2014
                                               -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                   $       7,879  $       8,124
  Adjustments to reconcile net income to net
   cash used in operating activities:
    Depreciation and amortization of property
     and equipment and intangibles                     3,758          3,228
    Stock-based compensation expense                   7,125          8,309
    Amortization of discounts and premiums on
     investments                                       1,478          3,002
    Deferred income taxes                              5,834           (971)
    Amortization of debt issuance costs and
     debt discount                                     1,955            240
    Excess tax benefits from employee stock-
     based compensation                                   --         (3,691)
    Allowance for doubtful accounts                       54            110
  Changes in assets and liabilities:
    Accounts receivable                                  986          5,960
    Inventories                                       (2,076)          (576)
    Deferred cost of technology revenues                 109          2,280
    Prepaid expenses and other                         2,150         (1,591)
    Accounts payable                                  (5,243)        (3,150)
    Accrued liabilities                              (15,124)       (16,340)
    Deferred revenue                                 (34,428)       (27,982)
    Other long-term liabilities                          (17)           (61)
                                               -------------  -------------
      Net cash used in operating activities    $     (25,560) $     (23,109)
                                               -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of short-term investments               (112,552)       (97,373)
  Sales or maturities of short-term investments      135,038        198,494
  Purchase of long-term investment                    (2,420)            --
  Acquisition of business, net of cash acquired           --       (128,387)
  Acquisition of property and equipment and
   other long-term assets                             (3,000)          (629)
  Acquisition of intangible assets                    (1,000)            --
                                               -------------  -------------
      Net cash provided by (used in) investing
       activities                              $      16,066  $     (27,895)
                                               -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock
   related to exercise of common stock options         5,076          2,080
  Excess tax benefits from employee stock-based
   compensation                                           --          3,691
  Treasury stock - repurchase of stock               (27,911)      (110,576)
                                               -------------  -------------
      Net cash used in financing activities    $     (22,835) $    (104,805)
                                               -------------  -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS      $     (32,329) $    (155,809)
                                               -------------  -------------
CASH AND CASH EQUIVALENTS:
  Balance at beginning of period                     178,217        253,713
                                               -------------  -------------
  Balance at end of period                     $     145,888  $      97,904
                                               =============  =============



                                  TIVO INC.
                                 OTHER DATA

                                                                Guidance
                                       Three Months Ended    Reconciliation
                                                            ----------------
                                                              Three Months
                                             Apr 30,             Ending
                                      --------------------
                                         2015       2014      July 31, 2015
                                      ---------  ---------  ----------------
                                         (In thousands)       (In millions)
Net Income                            $   7,879  $   8,124      $7 - $10
Add back:
 Depreciation & amortization              3,758      3,228         $4
 Interest income & expense, other         3,949        832         $4
 Provision (Benefit) for income tax       6,292      6,424       $7 - $8
                                      ---------  ---------  ----------------
  EBITDA                                 21,878     18,608      $22 - $26
 Stock-based compensation                 7,125      8,309       $6 - $7
                                      ---------  ---------  ----------------
  Adjusted EBITDA                     $  29,003  $  26,917      $29 - $32
 Litigation expenses                  $     890      1,075       $1 - $2
 Litigation proceeds (past damage
  awards)                             $       0  $       0         $0
                                      ---------  ---------  ----------------
 Adjusted EBITDA excluding litigation
  expense and litigation proceeds
  (past damage awards)                $  29,893  $  27,992      $30 - $34
                                      =========  =========  ================


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 less expense for stock-based compensation and TiVo’s "Adjusted EBITDA excluding litigation expenses and proceeds (past damage awards)" is Adjusted EBITDA less litigation related expenses 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
                                                 --------------------------
                                                    Apr 30,       Apr 30,
(Subscriptions and Households in thousands)           2015          2014
                                                 ============  ============
TiVo-Owned Gross Additions:                                39            32
Net Additions/(Losses):
  TiVo-Owned                                               --            (9)
  MSOs                                                    285           341
                                                 ------------  ------------
Total Net Additions/(Losses)                              285           332
Cumulative Subscriptions:
  TiVo-Owned                                              944           957
  MSOs                                                  4,813         3,584
                                                 ------------  ------------
Total Cumulative Subscriptions                          5,757         4,541
                                                 ------------  ------------
Average Subscriptions:
                                                 ------------  ------------
  TiVo-Owned Average Subscriptions                        944           961
                                                 ------------  ------------
  MSO Average Subscriptions                             4,669         3,420
                                                 ------------  ------------
Total Average Subscriptions:                            5,613         4,381
                                                 ------------  ------------
Total MSO Households                                    4,082         3,172
MSO Average Households                                  3,985         3,036
                                                 ------------  ------------
TiVo-Owned Fully Amortized Active Product
 Lifetime Subscriptions                                   147           161
% of TiVo-Owned Cumulative Subscriptions paying
 recurring fees                                            45%           50%


Subscriptions and Households. Management reviews these metrics, 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 TiVo-Owned and MSO Subscription and MSO Household bases as of April 30, 2015 compared to April 30, 2014. The TiVo-Owned Subscription lines refer to subscriptions sold directly or indirectly by TiVo to consumers 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 consumers by MSOs such as Com Hem, 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 monthly 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) a consumer 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. 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. 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 (product lifetime 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 10% and 3% of cumulative TiVo-Owned subscriptions as of April 30, 2015 and 2014, respectively. Increasing sales of TiVo Minis have helped slow, and in some quarters, reverse declines in our cumulative TiVo-Owned subscriptions and 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 increase in TiVo-Owned Subscriptions in the quarter and the decrease in the net loss of TiVo-Owned Subscriptions in quarter were based primarily on changes in our whole home pricing, including the bundling of product lifetime subscriptions with each TiVo Mini device, and the continued launch of our TiVo OTA (over-the-air) product. Subscriptions do not include soft-clients (i.e. iPad application 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 to 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.

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 INC.
                     OTHER DATA - KEY BUSINESS METRICS

                                                 Three Months Ended April
                                                           30,
                                               ---------------------------
TiVo-Owned Churn Rate                              2015           2014
                                               ------------   ------------
                                               (In thousands, except churn
                                                     rate per month)
                                               ---------------------------
Average TiVo-Owned subscriptions                        944            961
TiVo-Owned subscription cancellations                   (39)           (41)
                                               ------------   ------------
  TiVo-Owned Churn Rate per month                      (1.4)%         (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, CableCARD(TM) installation issues, and CableCARD(TM) 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    Twelve Months Ended
                                        Apr 30,               Apr 30,
                                 --------------------  --------------------
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------
Subscription Acquisition Costs           (In thousands, except SAC)

Sales and marketing, subscription
 acquisition costs               $   1,691  $   1,505  $   9,092  $  12,167
Hardware revenues                  (22,314)   (21,058)  (100,375)  (102,060)
Less: MSOs’-related hardware
 revenues                           17,298     15,896     76,996     74,392
Cost of hardware revenues           22,571     19,764     98,311     97,901
Less: MSOs’-related cost of
 hardware revenues                 (13,712)   (11,961)   (59,965)   (57,525)
                                 ---------  ---------  ---------  ---------
  Total Acquisition Costs            5,534      4,146     24,059     24,875
                                 =========  =========  =========  =========
  TiVo-Owned Subscription Gross
   Additions                            39         32        161        134
  Subscription Acquisition Costs
   (SAC)                         $     142  $     130  $     149  $     186
                                 =========  =========  =========  =========


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 rebates, 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, and Digitalsmiths’ revenues), from our total reported net Service revenues. The table below provides a more detailed breakdown of our Service revenues, and reconciles to our total Service revenues in our Statement of Operations as reported (or previously reported):


                                                     Three Months Ended
                                                ----------------------------
                                                   Apr 30,        Apr 30,
Service Revenues                                     2015           2014
                                                -------------  -------------
                                                       (In thousands)
                                                ----------------------------
TiVo-Owned-related service revenues             $      21,047  $      22,510
MSOs’-related service revenues                         14,078          9,950
Media services and other service revenues               4,724          3,435
                                                -------------  -------------
Total Service Revenues                          $      39,849  $      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
                                                ----------------------------
                                                   Apr 30,        Apr 30,
TiVo-Owned Average Revenue per Subscription          2015           2014
                                                -------------  -------------
                                                 (In thousands, except ARPU)
TiVo-Owned-related service revenues                    21,047         22,510
Average TiVo-Owned revenues per month                   7,016          7,503
Average TiVo-Owned subscriptions per month                944            961
                                                -------------  -------------
TiVo-Owned ARPU per month                       $        7.43  $        7.81
                                                =============  =============


Technology Revenues. Revenue and cash from the contractual minimums (i.e. the following amounts do not include any additional revenues from our AT&T agreement) under our licensing agreements with EchoStar, AT&T, Verizon, and Cisco and Google/Motorola Mobility through April 30, 2015 have been:


                                                      Technology     Cash
                                                       Revenues    Receipts
                                                      ----------  ----------
Fiscal Year Ended January 31,                             (In thousands)
2012                                                      35,275     117,679
2013                                                      76,841      86,356
2014                                                     136,532     464,725
2015                                                     169,641      83,579
Three month period from February 1, 2015 to April 30,
 2015                                                    $42,858      $6,545
                                                      ==========  ==========
Total                                                   $461,147    $758,884
                                                      ==========  ==========


Based on current GAAP, revenue and cash from the contractual minimums under all our licensing agreements with EchoStar, AT&T, Verizon, and Cisco and Motorola is expected to be recognized (revenues) and received (cash) for the remainder of the fiscal year 2016 and on an annual basis for the fiscal years thereafter as follows:


                                                      Technology     Cash
                                                       Revenues    Receipts
                                                      ----------  ----------
                                                          (In thousands)
Nine Months May 1, 2015 - January 31, 2016               128,705      77,034
Fiscal Year Ending January 31,
2017                                                     173,129      83,579
2018                                                     174,411      83,579
2019                                                      88,629      31,139
2020                                                       1,855          --
2021-2024                                                  6,388          --
                                                      ----------  ----------
Total                                                   $573,117    $275,331
                                                      ==========  ==========


SOURCE: TiVo Inc.




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