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TiVo (TIVO) Posts Narrower Loss in Q2, Beats on Revenues

Zacks Equity Research

TiVo Corporation’s TIVO second-quarter 2019 loss of 8 cents per share narrowed from the year-ago quarterly loss of 17 cents.

Meanwhile, the company’s non-GAAP earnings per share came in at 33 cents up from 26 cents a year ago.

Moreover, TiVo’s revenues of $176.2 million surpassed the Zacks Consensus Estimate of $162 million and also inched up 2% year over year driven by solid growth in core IP Licensing revenues.

The company’s core revenues (excludes revenues from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) of $174.3 million (98.9% of total) reflected an 8.8% increase from the year-ago quarter.

Given the solid second-quarter results, the company raised its full-year guidance, which is likely to buoy investors’ confidence in the stock.

Further, the company announced that the separation of its product division from its intellectual property (IP) licensing unit is on track and the split-up is likely to be completed in the first half of 2020.

Quarter in Detail

In terms of business segments, Product revenues (58% of total revenues) were down 8% to $85.2 million. Revenues from Platform Solution too decreased 9% to $65.7 million. Additionally, revenues from Other products, primarily legacy analog ACP product, plunged 76% to $234K. Further, Software and Services dipped 2% to $19.2 million.

Core Product revenues (excludes revenues from Hardware and Other Products) fell 5.9% to $83.3 million due to decline in consumer subscriber revenues. Moreover, in the year-ago quarter, the company recognized $2.2 million in minimum guarantee revenues, which induced an unfavorable comparison.

IP Licensing revenues (42%) increased approximately 14% year over year to $90.97 million. The company completed 15 new and renewal IP licensing deals in the quarter under review.

Under the IP Licensing segment, on a year-over-year basis, revenues from the U.S. Pay TV Providers declined 15% to $42 million. Albeit New Media, International Pay TV Providers and Other soared 88% to $41.2 million, Consumer Electronics Manufacturers dropped 13% to $7.7 million.

Core IP Licensing revenues (excludes revenues from Legacy TiVo Solutions IP Licenses) rose 26.9% year over year to $90.97 million. The company’s multi-year extension of its agreement with Shaw Communications (SJR) for the legacy TiVo IP portfolio is a key driver. Further, in licensing business, the company had its first social media customer win, which boosted results.

TiVo also announced that it entered into a long-term IP license agreement with Xumo during the quarter. Additionally, the beginning of the ongoing quarter, the company inked a global IP license deal with LG Electronics as well.

Adjusted EBITDA was up 21% from the year-ago quarter to $62.6 million due to higher IP licensing revenues, the company’s cost-saving initiatives and the timing of IP litigation costs.

TiVo exited the reported quarter with cash, cash equivalents and short-term marketable securities of $261.5 million compared with $271.9 million at the end of the previous reported quarter.

TiVo Corporation Price, Consensus and EPS Surprise

TiVo Corporation Price, Consensus and EPS Surprise
TiVo Corporation Price, Consensus and EPS Surprise

TiVo Corporation price-consensus-eps-surprise-chart | TiVo Corporation Quote


For fiscal 2019, TiVo expects revenues in the range of $650-$655 million, up from $640-$654 million predicted earlier.

Adjusted EBITDA is anticipated between $180 million and $190 million, up from $172 million-$178 million, envisioned earlier.

Further, the company’s non-GAAP earnings are likely to be in the range of 80-85 cents per share, up from 72-76 cents expected earlier.

Zacks Rank and Stocks to Consider

TiVo currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Computer and Technology sector are LogMeIn LOGM, Alteryx AYX and Rosetta Stone RST, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for LogMeIn, Alteryx and Rosetta Stone is currently estimated at 5%, 13.7% and 12.5%, respectively.

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