TiVo (TIVO) Down 4.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for TiVo (TIVO). Shares have lost about 4.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TiVo due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

TiVo's Q4 Earnings & Revenues Disappoint

TiVo Corporation reported fourth-quarter 2018 loss of $2.33 per share against year-ago quarter’s earnings of 15 cents.

The company’s non-GAAP earnings per share came in at 21 cents compared with 48 cents a year ago.

TiVo’s revenues decreased 21% year over year to $168.5 million. The top line also missed the Zacks Consensus Estimate of $174 million.

The company’s core revenues (excludes revenues from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) were $160.98 million, a decline of 11% from the year-ago quarter.

Moreover, the company could not provide any update on its ongoing strategic review process.

Quarter in Detail

Hardware division’s revenues declined to $3.8 million from $7.7 million recorded in the year-ago quarter. Sales of Other Products, primarily legacy analog ACP product, were $3.7 million. The company realized no revenues from the Legacy TiVo Time Warp deals as agreements with Time Warp expired last July.
 
In terms of business segments, Product revenues were down 4% to $96.5 million. Revenues from Platform Solutions decreased 8% to $74.5 million. Software and Services declined 5% to $18.3 million. However, Other category grew from $689K to $3.7 million.

Core Product revenues (excludes revenues from Hardware and Other Products) declined 3% to $89 million owing to the company’s shift to ASC 606 revenue standard, which per management, resulted in a $1.3 million decline in the top line. Increase in revenues from TiVo MSO customers was a positive.

IP Licensing revenues declined approximately 37% year over year to $71.99 million as it included no Time Warp revenues. In comparison, the company recognized $25.8 million of Time Warp revenues in the year-ago quarter. Further, fall in revenues from an out-of-license Consumer Electronics Manufacturers was an overhang.

Under the IP Licensing segment, on a year-over-year basis, revenues from the U.S. Pay TV Providers declined 49% to $42.3 million. New Media, International Pay TV Providers and Other grew 21% to $20.7 million. Consumer Electronics Manufacturers decreased 31% to $8.9 million due to expiration of license with a customer.

Core IP Licensing revenues (excludes revenues from Legacy TiVo Solutions IP Licenses) declined 18% year over year, primarily due to a $12.3 million decrease in revenues from catch-up payments.

TiVo’s unique voice users grew 54% sequentially to 3.7 million unique users at the end of fourth quarter. Additionally, quarterly queries grew 93% on a sequential basis to 238 million.

The company’s total cost and expenses decreased 9.6% year over year to $126.3 million on the back of reduced hardware sales and the company’s ongoing cost-reduction efforts.

Adjusted EBITDA declined 43.5% from year-ago quarter to $42.1 million due to lower revenues.

Non-GAAP pre-tax income was $30.2 million compared with $60.3 million a year ago.

TiVo exited the reported quarter with cash, cash equivalents and short-term marketable securities of $320.9 million compared with $311.8 million at the end of the previous quarter.

Note: The EPS data mentioned in the text of this section differs from the rest of report due to the difference in calculation or consideration of one-time items.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -37.5% due to these changes.

VGM Scores

Currently, TiVo has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise TiVo has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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