Exhibit 99.1
Contacts: | ||
Investor Relations: Ed Lockwood (408) 519-9345 Email:ir@tivo.com | Press Relations: Kathryn Kelly (408) 519-9245 Email:kkelly@tivo.com |
TiVo Second Quarter Subscription Growth Triples;
New DVR and $99 Offer to Accelerate Growth in Second Half
• | TiVo subscription base grows to approximately 1.9 million as of July 31, 2004; |
• | Service revenues increase nearly 80% compared to Q2 of last year; |
• | New products at $99 price point and expanded distribution expected to drive 1 million new sub additions in the second half |
SAN JOSE, CA – August 26, 2004 – TiVo (NASDAQ: TIVO), the creator of and a leader in television services for digital video recorders (DVRs), reported today that it added approximately 288,000 total subscriptions in the second quarter, more than triple the number it added in Q2 of last year. In the past twelve months, the Company’s total installed base has more than doubled to approximately 1.9 million.
Service revenues for the quarter increased 77% to $24.3 million, compared with $13.8 million for the three months ended July 31, 2003. Net loss for the quarter was ($10.8) million, or ($0.13) per share, compared to a net loss of ($4.4) million, or ($0.07) per share, for the three months ended July 31, 2003. The increase in net loss and net loss per share for the quarter reflects the Company’s previously announced investment in subscription acquisition activities to accelerate sub growth during fiscal year 2005.
TiVo Subs Grow by More than 500,000 in the First Half; DIRECTV with TiVo Subscriptions now Total More than One Million
In the first half of fiscal year 2005, the Company added approximately 552,000 total net subscriptions, a growth of approximately 3 times compared to the six-month period ending July 31, 2003.
Of the 288,000 net new subscriptions added in Q2, approximately 225,000 are DIRECTV with TiVo subscriptions, or about four times the number of new DIRECTV with TiVo subscriptions added in Q2 of last year. DIRECTV with TiVo subscriptions now total more than one million.
New TiVo-Owned subscription additions in Q2 were approximately 63,000, an 85% increase compared to Q2 of last year. These subscription additions are consistent with the pattern of seasonality the Company has experienced in previous years. The total installed base of TiVo-Owned subscriptions at the end of the quarter now numbers approximately 787,000, an increase of nearly 70% compared to Q2 of last year.
“Everything we’ve done in the first half of the year is setting us up for the significant growth we expect in both our TiVo-Owned and DIRECTV with TiVo subscriptions in the second half,” commented Mike Ramsay, chairman and CEO of TiVo. “We’re committed to growing our standalone business, and the investments we’ve made in low cost products and expanded distribution, coupled with the new $99 price point are keys to our growth in the second half of the year and beyond.”
New $99 TiVo Series2 DVR Offer, Coupled with Expanded Distribution to Accelerate Growth in the Second Half of the Year
Earlier in the month, TiVo announced a series of coordinated initiatives to support its growth strategy. These initiatives include a new $99 TiVo box (after rebate) and an expansion of the TiVo retail footprint to approximately 4,000 stores. These retailers include consumer mass merchant retailers Sam’s Club, Costco, and Target.com, in addition to consumer electronics retailers Best Buy, Circuit City, CompUSA, Tweeter, and Fry’s Electronics. These moves are being supported by a nationwide print and radio advertising campaign and an innovative rewards program to promote new subscriptions through referrals. Collectively, over the second half of this year, the Company expects the elements of this growth initiative to fuel one of the most substantial subscription growth periods in its history.
Management Reiterates Outlook for FY-05; Provides Guidance for the Third Quarter
In March, TiVo announced plans to invest up to an additional $50 million in subscription acquisition during the year. This plan is expected to result in a doubling of the total subscription base during this fiscal year to approximately 3 million subs, and to position the Company for sustainable profitability by the end of the next fiscal year. For the quarter ending October 31, 2004, management expects 340,000 to 400,000 net subscription additions, ending with approximately 2.2 to 2.3 million subs. Below are additional details of our Q3 guidance:
Third Quarter Management Guidance
(in millions, except subscription numbers)
| Quarter Ending October 31, 2004 | |
Service Revenues | $26.4 - $27.1 | |
Technology Revenues | $0.8 - $0.9 | |
Service and Technology Revenues | $27.2 - $28.0 | |
Rebates, Revenue Share and Other Payments to Channel | $(21.0) - $(23.0) | |
Cost of Service and Technology Revenues | $8.8 - $9.1 | |
Hardware Gross Margin | $(2.5) - $(3.5) | |
Gross Margin | $(4.7) - $(8.0) | |
Operating Loss | $(37.0) - $(41.0) | |
TiVo-Owned Subscription Net Additions | 100,000 – 120,000 | |
DIRECTV Subscription Net Additions | 240,000 – 280,000 | |
Total Subscription Net Additions | 340,000 – 400,000 | |
Cumulative Subscriptions | Approx. 2.2 to 2.3 million |
Conference Call and Web Cast
TiVo will host a conference call to discuss second quarter financial and operating performance at 2:00 pm PT (5:00 pm ET), today, August 26, 2004. To listen to the discussion, please visit www.tivo.com/ir and click on the link provided for the webcast conference call or dial (800) 500-0177 and use the conference ID number 864112. The web cast will be archived and available at www.tivo.com/ir or by calling 888-203-1112 and entering the conference ID number 864112.
About TiVo Inc.
Founded in 1997, TiVo (NASDAQ: TIVO), a pioneer in home entertainment, created a brand new category of products with the development of the first digital video recorder (DVR). Today, the Company continues to revolutionize the way consumers watch and access home entertainment by making TiVo the focal point of the digital living room, a center for sharing and experiencing television, music, photos and other content. TiVo connects consumers to the digital entertainment they want, where and when they want it. The Company is based in Alviso, California. TiVo and the TiVo Logo are registered trademarks of TiVo Inc. in the United States and other jurisdictions. 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, business development, strategy, subscriptions, and future earnings and financial results. 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 “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, 2004, and the Quarterly Report on Form 10-Q for the quarter ended April 30, 2004. 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 OPERATIONS
(In thousands, except per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
July 31, 2004 | July 31, 2003 | July 31, 2004 | July 31, 2003 | |||||||||||||
Service revenues | $ | 24,333 | $ | 13,757 | $ | 46,492 | $ | 26,459 | ||||||||
Technology revenues | 3,427 | 3,649 | 6,442 | 7,015 | ||||||||||||
Service and Technology revenues | 27,760 | 17,406 | 52,934 | 33,474 | ||||||||||||
Hardware sales | 18,592 | 8,057 | 32,929 | 22,866 | ||||||||||||
Rebates, rev share & other pmts to channel | (6,576 | ) | 1,209 | (11,564 | ) | (1,148 | ) | |||||||||
Net revenues | 39,776 | 26,672 | 74,299 | 55,192 | ||||||||||||
Cost of service revenues | 6,836 | 3,909 | 12,429 | 8,083 | ||||||||||||
Cost of technology revenues | 2,708 | 3,020 | 4,670 | 6,649 | ||||||||||||
Cost of hardware sales | 22,720 | 8,558 | 39,570 | 22,736 | ||||||||||||
Gross margin | 7,512 | 11,185 | 17,630 | 17,724 | ||||||||||||
Research and development | 8,138 | 5,789 | 17,137 | 11,261 | ||||||||||||
Sales and marketing | 6,026 | 4,502 | 11,626 | 8,501 | ||||||||||||
General and administrative | 3,794 | 4,061 | 8,033 | 7,839 | ||||||||||||
Loss from operations | (10,446 | ) | (3,167 | ) | (19,166 | ) | (9,877 | ) | ||||||||
Interest and other income (expense), net | (302 | ) | (1,195 | ) | (631 | ) | (2,355 | ) | ||||||||
Provision for taxes | (12 | ) | (25 | ) | (30 | ) | (37 | ) | ||||||||
Net loss attributable to common stockholders | $ | (10,760 | ) | $ | (4,387 | ) | $ | (19,827 | ) | $ | (12,269 | ) | ||||
Net loss per common share - basic and diluted | $ | (0.13 | ) | $ | (0.07 | ) | $ | (0.25 | ) | $ | (0.19 | ) | ||||
Weighted average common shares used to calculate basic & diluted | 80,197 | 65,834 | 79,998 | 64,927 | ||||||||||||
TIVO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, 2004 | January 31, 2004 | |||||
ASSETS | ||||||
Cash, cash equivalents and short-term investments | $ | 129,993 | $ | 143,235 | ||
Accounts receivable, net | 14,660 | 12,131 | ||||
Inventories | 23,088 | 8,566 | ||||
Prepaid expenses and other | 6,599 | 9,063 | ||||
Intangible, property and equipment, net | 10,358 | 10,896 | ||||
Total assets | $ | 184,698 | $ | 183,891 | ||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||
Accounts payable and other liabilities | $ | 47,962 | $ | 31,967 | ||
Deferred revenue | 80,888 | 80,287 | ||||
Convertible notes payable, long term (Face Value $10,450) | 6,866 | 6,005 | ||||
Total stockholders’ equity | 48,982 | 65,632 | ||||
Liabilities & stockholders’ equity | $ | 184,698 | $ | 183,891 | ||
TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended | ||||||||
July 31, 2004 | July 31, 2003 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss attributable to common stockholders | $ | (19,827 | ) | $ | (12,269 | ) | ||
Non-cash adjustments to reconcile net loss to net cash provided by operating activities: | 3,780 | 5,960 | ||||||
Working capital | 38 | (6,306 | ) | |||||
Long-term prepaid assets and liabilities | 1,637 | 70 | ||||||
Deferred revenue | 601 | (476 | ) | |||||
Net cash provided by (used in) operating activities | (13,771 | ) | (13,021 | ) | ||||
Net cash used in investing activities | (1,792 | ) | (785 | ) | ||||
Net cash provided by financing activities | 2,321 | 32,420 | ||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | ||||||||
Balance at beginning of period | 143,235 | 44,201 | ||||||
Balance at end of period | 129,993 | 62,815 | ||||||
Net increase (decrease) in cash | $ | (13,242 | ) | $ | 18,614 | |||
TIVO INC.
OTHER DATA
Subscriptions
Three Months Ended | Six Months Ended | |||||||||||
(Subscriptions in thousands)
| July 31, 2004 | July 31, 2003 | July 31, 2004 | July 31, 2003 | ||||||||
Subscription Net Additions | ||||||||||||
TiVo-Owned | 63 | 34 | 131 | 71 | ||||||||
DIRECTV | 225 | 56 | 421 | 98 | ||||||||
Total Subscription Net Additions | 288 | 90 | 552 | 169 | ||||||||
Cumulative Subscriptions | ||||||||||||
TiVo-Owned | 787 | 467 | 787 | 467 | ||||||||
DIRECTV | 1,097 | 326 | 1,097 | 326 | ||||||||
Total Cumulative Subscriptions | 1,884 | 793 | 1,884 | 793 | ||||||||
% of TiVo-Owned Cumulative Subscriptions paying recurring fees | 43 | % | 34 | % | 43 | % | 34 | % |
Included in the 1,884,000 subscriptions are approximately 26,000 product lifetime subscriptions that have reached the end of the 48-month period TiVo uses to recognize lifetime subscription revenue. These lifetime subscriptions no longer generate subscription revenue.