Exhibit 99.2
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Trend Sheet for GAAP Statement of Operations |
| (unaudited, in thousands, except per share data) |
| | Three Months Ended |
| | April 30, | Jan 31, | Oct 31, | July 31, | April 30, | Jan 31, | Oct 31, | July 31, |
| | 2014 | 2014 | 2013 | 2013 | 2013 | 2013 | 2012 | 2012 |
| Income Statement | | | | | | | | |
| Net revenues | $ | 107,059 |
| $ | 106,334 |
| $ | 117,256 |
| $ | 100,090 |
| $ | 82,573 |
| $ | 88,856 |
| $ | 82,027 |
| $ | 65,256 |
|
| Hardware revenues | 21,058 |
| 22,301 |
| 35,597 |
| 23,104 |
| 20,786 |
| 23,129 |
| 21,072 |
| 11,129 |
|
| Cost of hardware revenues | 19,764 |
| 23,163 |
| 33,017 |
| 21,957 |
| 18,496 |
| 21,847 |
| 23,434 |
| 14,431 |
|
| | | | | | | | | |
| Service and Technology revenues | $ | 86,001 |
| $ | 84,033 |
| $ | 81,659 |
| $ | 76,986 |
| $ | 61,787 |
| $ | 65,727 |
| $ | 60,955 |
| $ | 54,127 |
|
| Service revenues | 35,895 |
| 36,317 |
| 33,526 |
| 34,930 |
| 34,062 |
| 35,574 |
| 35,228 |
| 32,302 |
|
| Technology revenues | 50,106 |
| 47,716 |
| 48,133 |
| 42,056 |
| 27,725 |
| 30,153 |
| 25,727 |
| 21,825 |
|
| | | | | | | | | |
| Cost of service & technology revenues | $ | 18,394 |
| $ | 20,079 |
| $ | 16,845 |
| $ | 23,275 |
| $ | 14,516 |
| $ | 18,937 |
| $ | 17,017 |
| $ | 12,663 |
|
Cost of service revenues (1) | 13,850 |
| 15,596 |
| 11,233 |
| 11,408 |
| 10,805 |
| 11,619 |
| 11,238 |
| 8,871 |
|
Cost of technology revenues (1) | 4,544 |
| 4,483 |
| 5,612 |
| 11,867 |
| 3,711 |
| 7,318 |
| 5,779 |
| 3,792 |
|
| | | | | | | | | |
| Gross margin of service & technology revenues | $ | 67,607 |
| $ | 63,954 |
| $ | 64,814 |
| $ | 53,711 |
| $ | 47,271 |
| $ | 46,790 |
| $ | 43,938 |
| $ | 41,464 |
|
| | | | | | | | | |
| Operating expenses | | | | | | | | |
Research and development (1) | $ | 26,347 |
| $ | 26,908 |
| $ | 27,242 |
| $ | 26,305 |
| $ | 26,462 |
| $ | 26,614 |
| $ | 28,277 |
| $ | 29,652 |
|
Sales and marketing (1) | 10,315 |
| 11,238 |
| 10,189 |
| 9,069 |
| 8,507 |
| 8,928 |
| 7,958 |
| 7,243 |
|
| Sales and marketing, subscription acquisition costs | 1,505 |
| 6,038 |
| 2,628 |
| 1,996 |
| 1,859 |
| 3,471 |
| 1,560 |
| 2,372 |
|
General and administrative (1) | 15,354 |
| 16,461 |
| 15,839 |
| 23,225 |
| 21,786 |
| 23,708 |
| 21,772 |
| 25,429 |
|
| Litigation Proceeds | $ | — |
| $ | — |
| $ | — |
| $ | (108,102 | ) | $ | — |
| $ | — |
| $ | (78,441 | ) | $ | — |
|
| Interest and other income (expense) | $ | (832 | ) | $ | (701 | ) | $ | (1,032 | ) | $ | (466 | ) | $ | (1,151 | ) | $ | (1,158 | ) | $ | (575 | ) | $ | (1,114 | ) |
| Provision for income tax | (6,424 | ) | (1,036 | ) | 2,023 |
| 167,039 |
| (115 | ) | 31 |
| (848 | ) | (93 | ) |
| Net income (loss) for purpose of computing net income per share - basic | 8,124 |
| 710 |
| 12,487 |
| 268,938 |
| (10,319 | ) | (15,776 | ) | 59,027 |
| (27,741 | ) |
| | | | | | | | | |
| Net income (loss) for purpose of computing net income per share - diluted | 9,375 |
| 710 |
| 13,739 |
| 270,190 |
| (10,319 | ) | (15,776 | ) | 60,992 |
| (27,741 | ) |
| | | | | | | | | |
| Net income (loss) per basic common share | $ | 0.07 |
| $ | 0.01 |
| $ | 0.11 |
| $ | 2.27 |
| $ | (0.09 | ) | $ | (0.13 | ) | $ | 0.49 |
| $ | (0.23 | ) |
| Net income (loss) per diluted common share | $ | 0.07 |
| $ | 0.01 |
| $ | 0.10 |
| $ | 1.96 |
| $ | (0.09 | ) | $ | (0.13 | ) | $ | 0.44 |
| $ | (0.23 | ) |
| Weighted average common shares outstanding - basic | 113,382 |
| 117,040 |
| 116,760 |
| 118,601 |
| 121,381 |
| 120,200 |
| 119,364 |
| 119,137 |
|
| Weighted average common shares outstanding - diluted | 133,204 |
| 121,669 |
| 136,736 |
| 137,993 |
| 121,381 |
| 120,200 |
| 138,588 |
| 119,137 |
|
| | | | | | | | | |
| Balance Sheet & Cash Flow | | | | | | | | |
| Cash & cash equivalents, and short-term investments | $ | 742,108 |
| $ | 1,002,472 |
| $ | 1,027,866 |
| $ | 1,033,764 |
| $ | 570,877 |
| $ | 627,240 |
| $ | 623,550 |
| $ | 542,782 |
|
| Net cash provided by (used in) operating activities (YTD) | (23,109 | ) | 495,049 |
| 498,080 |
| 496,462 |
| (24,117 | ) | 47,289 |
| 52,016 |
| (43,895 | ) |
| | | | | | | | | |
| (1) Includes Stock-based compensation expenses as follows: | $ | 8,309 |
| $ | 10,312 |
| $ | 9,843 |
| $ | 10,464 |
| $ | 7,146 |
| $ | 9,292 |
| $ | 9,018 |
| $ | 8,696 |
|
| Cost of services revenues | 426 |
| 547 |
| 553 |
| 536 |
| 396 |
| 322 |
| 357 |
| 343 |
|
| Cost of technology revenues | 305 |
| 342 |
| 329 |
| 693 |
| 262 |
| 573 |
| 563 |
| 269 |
|
| Cost of hardware revenues | 81 |
| 69 |
| 78 |
| 74 |
| 83 |
| 63 |
| 71 |
| 66 |
|
| Research and development | 2,988 |
| 3,716 |
| 3,581 |
| 3,508 |
| 2,912 |
| 2,961 |
| 2,991 |
| 3,216 |
|
| Sales and marketing | 1,314 |
| 1,497 |
| 1,525 |
| 1,524 |
| 1,085 |
| 1,133 |
| 1,187 |
| 1,178 |
|
| General and administrative | 3,195 |
| 4,141 |
| 3,777 |
| 4,129 |
| 2,408 |
| 4,240 |
| 3,849 |
| 3,624 |
|
* During the three months ended January 31, 2014, cost of service was impacted by $3.3M and sales & marketing expense was impacted by $1.5M due to a non-cash TRA impairment charge.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Trend Sheet for Non-GAAP Key Financial Metrics (1) |
| (unaudited, in thousands except per share data) |
| | Three Months Ended |
| | April 30, | Jan 31, | Oct 31, | July 31, | April 30, | Jan 31, | Oct 31, | July 31, |
| | 2014 | 2014 | 2013 | 2013 | 2013 | 2013 | 2012 | 2012 |
| Reconciliation to EBITDA and Adjusted EBIDTA | | | | | | | | |
| Net income (loss) | $ | 8,124 |
| $ | 710 |
| $ | 12,487 |
| $ | 268,938 |
| $ | (10,319 | ) | $ | (15,776 | ) | $ | 59,027 |
| $ | (27,741 | ) |
| Add back: | | | | | | | | |
| Depreciation & amortization | 3,228 |
| 6,803 |
| 2,459 |
| 2,611 |
| 2,708 |
| 2,710 |
| 2,463 |
| 2,070 |
|
| Interest income & expense | 832 |
| 693 |
| 1,032 |
| 466 |
| 1,151 |
| 1,158 |
| 582 |
| 1,115 |
|
| Provision for income tax | 6,424 |
| 1,036 |
| (2,023 | ) | (167,039 | ) | 115 |
| (31 | ) | 848 |
| 93 |
|
| EBITDA | $ | 18,608 |
| $ | 9,242 |
| $ | 13,955 |
| $ | 104,976 |
| $ | (6,345 | ) | $ | (11,939 | ) | $ | 62,920 |
| $ | (24,463 | ) |
| Stock-based compensation | 8,309 |
| 10,312 |
| 9,843 |
| 10,464 |
| 7,146 |
| 9,292 |
| 9,018 |
| 8,696 |
|
| Adjusted EBITDA | $ | 26,917 |
| $ | 19,554 |
| $ | 23,798 |
| $ | 115,440 |
| $ | 801 |
| $ | (2,647 | ) | $ | 71,938 |
| $ | (15,767 | ) |
| Litigation expenses | 1,075 |
| 1,641 |
| 1,408 |
| 10,667 |
| 10,878 |
| 10,409 |
| 9,473 |
| 12,751 |
|
| Litigation proceeds (past damage awards) | — |
| — |
| — |
| (108,102 | ) | — |
| — |
| (78,441 | ) | — |
|
| Adjusted EBITDA excluding litigation expense and litigation proceeds (past damage awards) | $ | 27,992 |
| $ | 21,195 |
| $ | 25,206 |
| $ | 18,005 |
| $ | 11,679 |
| $ | 7,762 |
| $ | 2,970 |
| $ | (3,016 | ) |
| | | | | | | | | |
| Service Revenues | | | | | | | | |
| TiVo-Owned-related service revenues | $ | 22,510 |
| $ | 22,975 |
| $ | 23,462 |
| $ | 24,120 |
| $ | 24,280 |
| $ | 25,116 |
| $ | 25,412 |
| $ | 25,834 |
|
| MSOs'-related service revenues | 9,950 |
| 10,498 |
| 7,734 |
| 7,555 |
| 7,279 |
| 7,429 |
| 6,767 |
| 5,056 |
|
| Media services and other service revenues | 3,435 |
| 2,844 |
| 2,330 |
| 3,255 |
| 2,503 |
| 3,029 |
| 3,049 |
| 1,412 |
|
| Total Service Revenues | $ | 35,895 |
| $ | 36,317 |
| $ | 33,526 |
| $ | 34,930 |
| $ | 34,062 |
| $ | 35,574 |
| $ | 35,228 |
| $ | 32,302 |
|
| | | | | | | | | |
| Subscription Metrics | | | | | | | | |
| TiVo-Owned subscription gross additions | 32 |
| 49 |
| 33 |
| 20 |
| 24 |
| 35 |
| 30 |
| 28 |
|
| TiVo-Owned subscription cancellations | (41 | ) | (43 | ) | (54 | ) | (46 | ) | (46 | ) | (48 | ) | (45 | ) | (51 | ) |
TiVo-Owned churn rate per month (2) | (1.4 | )% | (1.5 | )% | (1.8 | )% | (1.5 | )% | (1.5 | )% | (1.5 | )% | (1.4 | )% | (1.6 | )% |
| TiVo-Owned net additions (losses) | (9 | ) | 6 |
| (21 | ) | (26 | ) | (22 | ) | (13 | ) | (15 | ) | (23 | ) |
| TiVo-Owned cumulative subscriptions | 957 |
| 966 |
| 960 |
| 981 |
| 1,007 |
| 1,029 |
| 1,042 |
| 1,057 |
|
| % of TiVo-Owned cumulative subscriptions paying recurring fees | 51 | % | 51 | % | 52 | % | 52 | % | 52 | % | 53 | % | 54 | % | 54 | % |
| Fully amortized active lifetime subscriptions | 161 |
| 171 |
| 169 |
| 176 |
| 181 |
| 194 |
| 208 |
| 221 |
|
| | | | | | | | | |
| MSOs net additions (losses) | 341 |
| 313 |
| 295 |
| 238 |
| 277 |
| 222 |
| 240 |
| 253 |
|
| | | | | | | | | |
| Total subscription net additions (losses) | 332 |
| 319 |
| 274 |
| 212 |
| 255 |
| 209 |
| 225 |
| 230 |
|
| MSOs cumulative subscriptions | 3,584 |
| 3,243 |
| 2,930 |
| 2,635 |
| 2,397 |
| 2,120 |
| 1,898 |
| 1,658 |
|
| Total cumulative subscriptions | 4,541 |
| 4,209 |
| 3,890 |
| 3,616 |
| 3,404 |
| 3,149 |
| 2,940 |
| 2,715 |
|
| MSOs average subscriptions | 3,420 |
| 3,072 |
| 2,775 |
| 2,514 |
| 2,261 |
| 2,011 |
| 1,771 |
| 1,539 |
|
| TiVo-Owned ARPU & Subscription Acquisition Costs | | | | | | | | |
| TiVo-Owned-related service revenues | $ | 22,510 |
| $ | 22,975 |
| $ | 23,462 |
| $ | 24,120 |
| $ | 24,280 |
| $ | 25,116 |
| $ | 25,412 |
| $ | 25,834 |
|
| TiVo-Owned average subscriptions | 961 |
| 962 |
| 974 |
| 994 |
| 1,018 |
| 1,035 |
| 1,050 |
| 1,068 |
|
| TiVo-Owned ARPU per month | $7.81 | $7.96 | $8.03 | $8.09 | $7.95 | $8.09 | $8.07 | $8.06 |
| | | | | | | | | |
| TiVo-Owned total acquisition costs (Quarterly) | $ | 4,146 |
| $ | 9,884 |
| $ | 5,277 |
| $ | 5,568 |
| $ | 4,492 |
| $ | 7,987 |
| $ | 5,132 |
| $ | 6,971 |
|
| TiVo-Owned subscription gross additions (Quarterly) | 32 |
| 49 |
| 33 |
| 20 |
| 24 |
| 35 |
| 30 |
| 28 |
|
TiVo-Owned subscription acquisition costs (Quarterly) | $ | 130 |
| $ | 202 |
| $ | 160 |
| $ | 278 |
| $ | 187 |
| $ | 228 |
| $ | 171 |
| $ | 249 |
|
| | | | | | | | | |
| TiVo-Owned total acquisition costs ( 12 months ended) | $ | 24,875 |
| $ | 25,221 |
| $ | 23,324 |
| $ | 23,179 |
| $ | 24,582 |
| $ | 25,666 |
| $ | 25,168 |
| $ | 28,928 |
|
| TiVo-Owned subscription gross additions (12 months ended) | 134 |
| 126 |
| 112 |
| 109 |
| 117 |
| 117 |
| 114 |
| 114 |
|
| TiVo-Owned subscription acquisition costs (12 months ended) | $ | 186 |
| $ | 200 |
| $ | 208 |
| $ | 213 |
| $ | 210 |
| $ | 219 |
| $ | 221 |
| $ | 254 |
|
| | | | | | | | | |
| MSO Household Metrics | | | | | | | | |
| Total MSO households | 3,172 |
| 2,912 |
| 2,664 |
| 2,410 |
| 2,222 |
| 1,980 |
| 1,782 |
| 1,565 |
|
| MSO average households | 3,036 |
| 2,785 |
| 2,535 |
| 2,318 |
| 2,104 |
| 1,884 |
| 1,668 |
| 1,460 |
|
| | | | | | | | | |
(1) This presentation is not prepared under a comprehensive set of accounting rules or principles such as GAAP.
(2) The increase in the number of subscriptions that canceled during the quarter ended October 31, 2013 was related to a one-time non-recurring event of approximately 12,000 subscription cancellations from one specific corporate customer, Healthcast. Without the cancellations from this customer, our TiVo-Owned churn rate per month would have remained flat.
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. 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 |
| (Subscriptions and Households in thousands) | Apr 30,
2014 | Jan 31,
2014 | Oct 31,
2013 | Jul 31,
2013 | Apr 30,
2013 | Jan 31,
2013 | Oct 31,
2012 | Jul 31,
2012 |
| TiVo-Owned Gross Additions: | 32 |
| 49 |
| 33 |
| 20 |
| 24 |
| 35 |
| 30 |
| 28 |
|
| Net Additions/(Losses): |
|
|
|
|
|
|
|
|
| TiVo-Owned | (9 | ) | 6 |
| (21 | ) | (26 | ) | (22 | ) | (13 | ) | (15 | ) | (23 | ) |
| MSOs | 341 |
| 313 |
| 295 |
| 238 |
| 277 |
| 222 |
| 240 |
| 253 |
|
| Total Net Additions/(Losses) | 332 |
| 319 |
| 274 |
| 212 |
| 255 |
| 209 |
| 225 |
| 230 |
|
| Cumulative Subscriptions: |
|
|
|
|
|
|
|
|
| TiVo-Owned | 957 |
| 966 |
| 960 |
| 981 |
| 1,007 |
| 1,029 |
| 1,042 |
| 1,057 |
|
| MSOs | 3,584 |
| 3,243 |
| 2,930 |
| 2,635 |
| 2,397 |
| 2,120 |
| 1,898 |
| 1,658 |
|
| Total Cumulative Subscriptions | 4,541 |
| 4,209 |
| 3,890 |
| 3,616 |
| 3,404 |
| 3,149 |
| 2,940 |
| 2,715 |
|
| Average Subscriptions: |
|
|
|
|
|
|
|
|
|
|
| TiVo-Owned Average Subscriptions | 961 |
| 962 |
| 974 |
| 994 |
| 1,018 |
| 1,035 |
| 1,050 |
| 1,068 |
|
| MSO Average Subscriptions | 3,420 |
| 3,072 |
| 2,775 |
| 2,514 |
| 2,261 |
| 2,011 |
| 1,771 |
| 1,539 |
|
| Total Average Subscriptions: | 4,381 |
| 4,034 |
| 3,749 |
| 3,508 |
| 3,279 |
| 3,046 |
| 2,821 |
| 2,607 |
|
| Total MSO Households | 3,172 |
| 2,912 |
| 2,664 |
| 2,410 |
| 2,222 |
| 1,980 |
| 1,782 |
| 1,565 |
|
| MSO Average Households | 3,036 |
| 2,785 |
| 2,535 |
| 2,318 |
| 2,104 |
| 1,884 |
| 1,668 |
| 1,460 |
|
| TiVo-Owned Fully Amortized Lifetime Active Subscriptions | 161 |
| 171 |
| 169 |
| 176 |
| 181 |
| 194 |
| 208 |
| 221 |
|
| % of TiVo-Owned Cumulative Subscriptions paying recurring fees | 51 | % | 51 | % | 52 | % | 52 | % | 52 | % | 53 | % | 54 | % | 54 | % |
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 subscription base during the last eight quarters. The TiVo-Owned 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 lines refer to subscriptions sold to consumers by MSOs such as Virgin, ONO, RCN, Grande, GCI, and Suddenlink, 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 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 TiVo Mini for which (i) a consumer has 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 household. 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 subscription fees that our MSOs pay us are typically based upon a specific contractual definition of a subscriber, subscription, or a TiVo-enabled device which may not be consistent with how we define a subscription for our reporting purposes nor be representative of how such subscription fees are calculated and paid to us by our MSOs. Our MSOs subscription data is dependent in part on reporting from our third-party MSO partners.
|
| | | | | | | | | | | | | | | | |
| TiVo-Owned Churn Rate | Three Months Ended |
| (Subscriptions in thousands) | Apr 30,
2014 | Jan 31,
2014 | Oct 31,
2013 | Jul 31,
2013 | Apr 30,
2013 | Jan 31,
2013 | Oct 31,
2012 | Jul 31,
2012 |
| Average TiVo-Owned subscriptions | 961 |
| 962 |
| 974 |
| 994 |
| 1,018 |
| 1,035 |
| 1,050 |
| 1,068 |
|
| TiVo-Owned subscription cancellations | (41 | ) | (43 | ) | (54 | ) | (46 | ) | (46 | ) | (48 | ) | (45 | ) | (51 | ) |
| TiVo-Owned Churn Rate per month | (1.4 | )% | (1.5 | )% | (1.8 | )% | (1.5 | )% | (1.5 | )% | (1.5 | )% | (1.4 | )% | (1.6 | )% |
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, CableCARDTM installation issues, and CableCARDTM 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 |
| | Apr 30,
2014 | Jan 31,
2014 | Oct 31,
2013 | Jul 31,
2013 | Apr 30,
2013 | Jan 31,
2013 | Oct 31,
2012 | Jul 31,
2012 |
| | (In thousands, except SAC) |
| Subscription Acquisition Costs |
|
|
|
|
|
|
|
|
| Sales and marketing, subscription acquisition costs | $ | 1,505 |
| $ | 6,038 |
| $ | 2,628 |
| $ | 1,996 |
| $ | 1,859 |
| $ | 3,471 |
| $ | 1,560 |
| $ | 2,372 |
|
| Hardware revenues | (21,058 | ) | (22,301 | ) | (35,597 | ) | (23,104 | ) | (20,786 | ) | (23,129 | ) | (21,072 | ) | (11,129 | ) |
| Less: MSOs-related hardware revenues | 15,896 |
| 12,634 |
| 25,759 |
| 20,103 |
| 16,002 |
| 16,834 |
| 13,051 |
| 6,696 |
|
| Cost of hardware revenues | 19,764 |
| 23,163 |
| 33,017 |
| 21,957 |
| 18,496 |
| 21,847 |
| 23,434 |
| 14,431 |
|
| Less: MSOs-related cost of hardware revenues | (11,961 | ) | (9,650 | ) | (20,530 | ) | (15,384 | ) | (11,079 | ) | (11,036 | ) | (11,841 | ) | (5,399 | ) |
| Total Acquisition Costs | 4,146 |
| 9,884 |
| 5,277 |
| 5,568 |
| 4,492 |
| 7,987 |
| 5,132 |
| 6,971 |
|
| TiVo-Owned Subscription Gross Additions | 32 |
| 49 |
| 33 |
| 20 |
| 24 |
| 35 |
| 30 |
| 28 |
|
| Subscription Acquisition Costs (SAC) | $ | 130 |
| $ | 202 |
| $ | 160 |
| $ | 278 |
| $ | 187 |
| $ | 228 |
| $ | 171 |
| $ | 249 |
|
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. 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 |
| Service Revenues | Apr 30,
2014 | Jan 31,
2014 | Oct 31,
2013 | Jul 31,
2013 | Apr 30,
2013 | Jan 31,
2013 | Oct 31,
2012 | Jul 31,
2012 |
| | (in thousands) |
| TiVo-Owned-related service revenues | $22,510 | $22,975 | $23,462 | $24,120 | $24,280 | $25,116 | $25,412 | $25,834 |
| MSOs'-related service revenues | 9,950 |
| 10,498 |
| 7,734 |
| 7,555 |
| 7,279 |
| 7,429 |
| 6,767 |
| 5,056 |
|
| Media services and other service revenues | 3,435 |
| 2,844 |
| 2,330 |
| 3,255 |
| 2,503 |
| 3,029 |
| 3,049 |
| 1,412 |
|
| Total Service Revenues | $35,895 | $36,317 | $33,526 | $34,930 | $34,062 | $35,574 | $35,228 | $32,302 |
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 |
| TiVo-Owned Average Revenue per Subscription | Apr 30,
2014 | Jan 31,
2014 | Oct 31,
2013 | Jul 31,
2013 | Apr 30,
2013 | Jan 31,
2013 | Oct 31,
2012 | Jul 31,
2012 |
| | (In thousands, except ARPU) | |
| TiVo-Owned-related service revenues | 22,510 |
| 22,975 |
| 23,462 |
| 24,120 |
| 24,280 |
| 25,116 |
| 25,412 |
| 25,834 |
|
| Average TiVo-Owned revenues per month | 7,503 |
| 7,658 |
| 7,821 |
| 8,040 |
| 8,093 |
| 8,372 |
| 8,471 |
| 8,611 |
|
| Average TiVo-Owned subscriptions per month | 961 |
| 962 |
| 974 |
| 994 |
| 1,018 |
| 1,035 |
| 1,050 |
| 1,068 |
|
| TiVo-Owned ARPU per month | $ | 7.81 |
| $ | 7.96 |
| $ | 8.03 |
| $ | 8.09 |
| $ | 7.95 |
| $ | 8.09 |
| $ | 8.07 |
| $ | 8.06 |
|
