Press release

TiVo Corporation Reports First Quarter 2019 Financial Results

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TiVo Corporation (NASDAQ: TIVO) today reported financial results for the
first quarter ended March 31, 2019. Earlier today, the Company also
announced a plan to split its Product and IP Licensing businesses into
two separate independent companies.

“We had a solid quarter with a strong focus on company execution,” said
Raghu Rau, Interim President and Chief Executive Officer. “Management
has, and will remain, focused on driving growth with profitability by
executing the previously announced five pillars of growth with
profitability strategy. On the product side, we announced our first IPTV
deployments of TiVo User Experience 4. Additionally, we are on track to
launch several new products and business models in the second half of
the year. On the Intellectual Property Licensing front, we continued to
demonstrate the strength of our patents internationally and validated
the value of our intellectual property in the social media space by
signing our first licensee in this rapidly growing market.”

“We are pleased that our Board has approved the separation of TiVo’s
Product and IP Licensing businesses and believe both businesses will be
better positioned independently. We believe the separation will unlock
shareholder value and increase our flexibility in pursuing new and
growing market opportunities. Throughout the separation process, the
Board of Directors will continue to be open to strategic transactions
for each business that could create additional stockholder value and is
actively engaged in discussions with interested parties for each
business,” continued Mr. Rau.

BUSINESS OUTLOOK

For fiscal year 2019, the Company expects revenue of $640 million to
$654 million, and a GAAP loss before taxes of $75 million to $87
million. Additionally, the Company expects Adjusted EBITDA of $172
million to $178 million and Non-GAAP Pre-tax Income of $120 million to
$126 million. TiVo anticipates it will incur $28 million to $29 million
in Cash Taxes based on its operating expectations. Additionally, TiVo
expects its GAAP Diluted weighted average shares outstanding to be
approximately 126 million and Non-GAAP Diluted Weighted Average Shares
Outstanding to be approximately 127 million.

CAPITAL ALLOCATION

On May 8, 2019, TiVo’s Board of Directors declared a cash dividend of
$0.08 per common share, to be paid on June 19, 2019 to stockholders of
record as of the close of business on June 5, 2019. In preparation for
the separation, the Board and management are focused on determining the
optimal strategy, operating structure and capital allocation policy for
each business. Accordingly, the Board felt it prudent to adjust the
current dividend in order to optimize our two balance sheets in advance
of the separation. While this is a lower dividend than in previous
quarters, it still provides a meaningfully higher yield than the S&P 500
average dividend yield.

     

FIRST QUARTER 2019 FINANCIAL HIGHLIGHTS

 
Quarterly Financial Information (In thousands)

Three Months Ended
March 31,

2019   2018 % Change
GAAP Consolidated Results
Total Revenues, net $ 158,235 $ 189,837

(17)

%

Total costs and expenses 166,255 198,877

(16)

%

Operating loss (8,020 ) (9,040 )

(11)

%

Loss from continuing operations before income taxes (20,326 ) (14,797 ) 37 %
Loss from continuing operations, net of tax (26,644 ) (19,014 ) 40 %
 
GAAP Diluted weighted average shares outstanding 124,422 122,080
 
Total Revenues, net $ 158,235 $ 189,837

(17)

%

Legacy TiVo Solutions IP Licenses (8,884 )

(100)

%

Hardware (2,074 ) (3,679 )

(44)

%

Other Products (364 ) (2,433 )

(85)

%

Core Revenue (excludes revenue from Legacy TiVo Solutions IP
Licenses, Hardware and Other Products)
$ 155,797   $ 174,841  

(11)

%

 

Total Revenues, net and Core Revenue decreased $31.6 million and $19.0
million, respectively, primarily due to $23.9 million of revenue
recognized from an international MSO customer exercising a contractual
option during Q1 2018 to purchase a fully paid license to its
then-current version of the TiVo software and purchasing additional
engineering services in the same period. These decreases were partially
offset by a new Passport agreement executed with an international MSO
customer during Q1 2019. In addition, Total Revenues, net decreased by
$8.9 million due to the expiration of the “Legacy Time Warp” agreements
that were entered into prior to the TiVo acquisition. The decrease in
Total costs and expenses was the result of lower Amortization of
intangible assets, the Company’s continuing cost reduction efforts and
the timing of patent litigation costs, primarily related to the ongoing
Comcast litigation.

     
(In thousands)

Three Months Ended
March 31,

2019   2018 % Change
Non-GAAP Consolidated Results
Adjusted EBITDA $ 37,441 $ 58,966 (37 )%
Non-GAAP Pre-tax Income 25,349 46,265 (45 )%
Cash Taxes 4,926 7,687 (36 )%
 
Non-GAAP Diluted Weighted Average Shares Outstanding 125,123 122,595
 

Adjusted EBITDA, Non-GAAP Pre-tax Income, Non-GAAP Diluted Weighted
Average Shares Outstanding and Cash Taxes are defined below in the
section entitled “Non-GAAP Financial Information.” Reconciliations
between GAAP and Non-GAAP amounts are provided in the tables below. In
accordance with the SEC’s interpretations on the use of Non-GAAP
financial measures, TiVo does not report net income or EPS on a non-GAAP
basis; however, TiVo provides financial metrics, including Non-GAAP
Pre-tax Income, Non-GAAP Diluted Weighted Average Shares Outstanding and
Cash Taxes, to assist those wanting to calculate such measures on a
Non-GAAP basis.

     

SEGMENT RESULTS AND OPERATING HIGHLIGHTS – PRODUCT

 
(In thousands)

Three Months Ended
March 31,

 
2019   2018 % Change
Platform Solutions $ 71,037 $ 95,940

(26)

%

Software and Services 19,902 18,479 8 %
Other 364   2,433  

(85)

%

Total Product Revenue, net 91,303 116,852

(22)

%

Adjusted Operating Expenses 82,890   89,466  

(7)

%

Adjusted EBITDA $ 8,413   $ 27,386  

(69)

%

Adjusted EBITDA Margin 9.2 % 23.4 %
 
Total Product Revenue, net $ 91,303 $ 116,852

(22)

%

Hardware (2,074 ) (3,679 )

(44)

%

Other Products (364 ) (2,433 )

(85)

%

Core Product Revenue (excludes revenue from Hardware and Other
Products)
$ 88,865   $ 110,740  

(20)

%

 

The $24.9 million decrease in Platform Solutions revenue and the $21.9
million decrease in Core Revenue was primarily attributable to a $23.9
million decrease in revenue recognized from an international MSO
customer who exercised a contractual option during Q1 2018 to purchase a
fully paid license to its then-current version of the TiVo software.

The decrease in Adjusted Operating Expenses primarily relates to reduced
spending on Research and Development due to cost saving initiatives and
benefits from decreases in Cost of hardware revenues as a result of
planned transition of our MSO partners and retail customers to deploying
TiVo service on third-party hardware.

Product Segment Operating Highlights:

  • Approximately 22 million subscriber households around the world use
    TiVo’s advanced television experiences.
  • RCN will power its next-generation solution with TiVo’s IPTV suite of
    products, including TiVo solutions for Android TVTM, TiVo
    for Streamers and TiVo for Mobile. This will enable the delivery of
    IPVOD, IP Linear, Restart, Catch-Up and Network DVR content to RCN
    subscribers.
  • Armstrong has chosen TiVo’s Next-Gen Platform that will enable a
    seamless transition to IPTV by deploying TiVo’s cloud-powered IPTV
    suite of solutions, including IPVOD, IP Linear, Restart, Catch-Up, and
    Network DVR, across a host of clients. In addition, Armstrong recently
    rolled out TiVo Experience 4 and voice-activated remote control
    functionality to its entire subscriber base.
  • Launched CubiTV™ Solutions for Android TV™, a modular, cost-effective,
    easy to deploy, pre-integrated solution with an intuitive
    operator-branded interface that taps into the power of Google
    Assistant search and browse functionality. Android TV is a trademark
    of Google LLC.
  • Service Electric Cable T.V. selected TiVo’s Next-Gen Platform to power
    its IP Linear services for streamers (Android TV, Apple TV and Fire
    TV) and for its mobile apps.
  • TiVo’s Passport Guide agreement with Cable Bahamas, a leading service
    provider and telecommunications in the region, was renewed.
  • TiVo has signed and renewed a number of Metadata agreements for
    customers in various industries, including leading players in music
    streaming, e-commerce and software, reaffirming the value of TiVo’s
    Metadata to market segments beyond the traditional broadcast networks
    and the electronic devices industries.
  • Redbox is deploying TiVo’s Personalized Content Discovery platform,
    including Search, Recommendations and Insights, as well as TiVo’s
    Video and Video Game Metadata across Redbox.com, Redbox On Demand
    streaming apps and physical boxes nationwide.
  • Funimation, a leading global anime content provider and a subsidiary
    of Sony Pictures Television (SPT), has licensed the Search,
    Recommendations and Insight modules of TiVo’s Personalized Content
    Discovery (PCD) platform.
  • TiVo’s TV Viewership Data continues to expand its customer base. Some
    of the customers that recently adopted this solution are:

    • Neustar, the leader in trusted customer identity and marketing
      analytics solutions for Fortune 500 brands.
    • A major broadcast and cable television network group.
    • VideoAmp, a software and data company that helps marketers and
      media owners optimize brand marketing against business results.
  • In the first quarter of 2019, we saw continued significant growth of
    TiVo’s PCD Conversation product. Monthly Active Users (MAU) in March
    2019 was 4.9 million, a 31% increase over the December 2018 MAU of 3.7
    million. Additionally, our Quarterly Voice API calls increased by 36%,
    growing from 238 million calls in Q4 2018 to 324 million in Q1 2019.
  • TiVo has expanded the footprint of the Sponsored Discovery advertising
    offering to include multiple MVPDs. Campaigns continue to drive strong
    performance: a major broadcast network ran a Sponsored Discovery
    campaign to promote a new series throughout its launch. The campaign
    increased tune-in by 436% to the series by those who saw the campaign.
     

SEGMENT RESULTS AND OPERATING HIGHLIGHTS – IP LICENSING

 
(In thousands)

Three Months Ended
March 31,

 
2019   2018 % Change
US Pay TV Providers $ 42,117 $ 49,915

(16)

%

CE Manufacturers 8,618 8,968

(4)

%

New Media, International Pay TV Providers and Other 16,197   14,102   15 %
Total IP Licensing Revenue, net 66,932 72,985

(8)

%

Adjusted Operating Expenses 21,807   25,357  

(14)

%

Adjusted EBITDA: $ 45,125   $ 47,628  

(5)

%

Adjusted EBITDA Margin 67.4 % 65.3 %
 
Total IP Licensing Revenue, net $ 66,932 $ 72,985

(8)

%

Legacy TiVo Solutions IP Licenses   (8,884 )

(100)

%

Core Intellectual Property Licensing Revenue (excludes revenue from
Legacy TiVo Solutions IP Licenses)
$ 66,932   $ 64,101   4 %
 

Intellectual Property Licensing revenue decreased 8% in the first
quarter. The $6.1 million decline in revenue is attributable to an $8.9
million decrease in revenue as a result of the expiration of the Legacy
Time Warp agreements, offset by increases in revenue from our existing
customers.

The decrease in Adjusted Operating Expenses relates to the timing of
patent litigation costs in the ongoing Comcast litigation.

Intellectual Property Licensing Segment Operating Highlights:

  • The Intellectual Property portfolio continues to demonstrate its
    relevance internationally with several multi-year renewals:

    • Humax, one of the world’s leading digital video gateway
      manufacturers, exporting its products to more than 90 countries
      across the globe, extended its intellectual property license
      agreement and included TiVo patents to its licensed portfolio.
    • TVStorm, a leading company of digital media service in Asia, has
      recently renewed its patent license agreement.
    • Dwango, a Japanese internet-based entertainment enterprise that
      offers a variety of digital content and services, renewed its
      patent license agreement.
  • In Q2, we signed a multi-year deal with a major social media company,
    our first in the growing space.

CONFERENCE CALL INFORMATION

TiVo management will host a conference call today, May 9, 2019, at 2:00
p.m. PT/5:00 p.m. ET to discuss the financial and operational results.
Investors and analysts interested in participating in the conference are
welcome to call (866) 621-1214 (or international +1-706-643-4013) and
reference conference ID 8759528. The conference call may also be
accessed via live webcast in the Investor Relations section of TiVo’s
website at http://ir.tivo.com.

A replay of the audio webcast will be available on TiVo’s website
shortly after the live call ends, and we currently plan for it to remain
on TiVo’s website until the next quarterly earnings call. Additionally,
a telephonic replay of the call will be accessible shortly after the
live call ends through May 16, 2019 by dialing (855) 859-2056 (or
international +1-404-537-3406) and entering conference ID 8759528.

NON-GAAP FINANCIAL INFORMATION

TiVo Corporation provides Non-GAAP information to assist investors in
assessing its operations in the way that its management evaluates those
operations. Non-GAAP Pre-Tax Income, Non-GAAP Cost of Licensing,
Services and Software Revenues, Non-GAAP Cost of Hardware Revenues,
Non-GAAP Research and Development Expenses, Non-GAAP Selling, General
and Administrative Expenses, Non-GAAP Depreciation, Non-GAAP Total OpEx
Excluding Goodwill Impairment, Non-GAAP Total OpEx, Non-GAAP Total COGS
and OpEx, Adjusted EBITDA and Non-GAAP Interest Expense are supplemental
measures of the Company’s performance that are not required by, and are
not determined in accordance with, GAAP. Non-GAAP financial information
is not a substitute for any financial measure determined in accordance
with GAAP.

Non-GAAP Pre-tax Income is defined as GAAP income (loss) from continuing
operations before income taxes, as adjusted for the effects of items
such as amortization of intangible assets, equity-based compensation,
accretion of contingent consideration, amortization or write-off of note
issuance costs, discounts on convertible debt and mark-to-market
adjustments for interest rate swaps and interest on escheat liabilities;
as well as items which impact comparability that are required to be
recorded under GAAP, but that the Company believes are not indicative of
its core operating results such as goodwill impairment, restructuring
and asset impairment charges, separation costs, transaction, transition
and integration costs, retention earn-outs payable to former
shareholders of acquired businesses, earn-out settlements, CEO
transition cash costs, remeasurement of contingent consideration, TiVo
acquisition litigation, expenses in connection with the extinguishment
or modification of debt, gain on settlement of acquired receivable,
additional depreciation resulting from facility rationalization actions,
other-than temporary impairment losses on strategic investments, gains
on the sale of strategic investments and changes in escheat liabilities.

Non-GAAP Cost of Licensing, Services and Software Revenues is defined as
GAAP Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets, excluding
equity-based compensation and transaction, transition and integration
expenses.

Non-GAAP Cost of Hardware Revenues is defined as GAAP Cost of hardware
revenues, excluding depreciation and amortization of intangible assets,
excluding equity-based compensation and transition and integration
expenses.

Non-GAAP Research and Development Expenses is defined as GAAP research
and development expenses excluding equity-based compensation, transition
and integration expenses and retention earn-outs payable to former
shareholders of acquired businesses.

Non-GAAP Selling, General and Administrative Expenses is defined as GAAP
selling, general and administrative expenses excluding equity-based
compensation, separation costs, transaction, transition and integration
expenses, retention earn-outs payable to former shareholders of acquired
businesses, earn-out settlements, CEO transition cash costs,
remeasurement of contingent consideration and gain on settlement of
acquired receivable.

Non-GAAP Depreciation is defined as GAAP depreciation expenses excluding
the impact of additional depreciation resulting from changes in the
estimated useful lives of assets involved in facility rationalization
actions.

Non-GAAP Total OpEx Excluding Goodwill Impairment is defined as GAAP
Total Operating costs and expenses excluding goodwill impairment.

Non-GAAP Total OpEx is defined as the sum of GAAP research and
development and selling, general and administrative expenses,
depreciation and gain on sale of patents excluding equity-based
compensation, separation costs, transaction, transition and integration
expenses, retention earn-outs payable to former shareholders of acquired
businesses, earnout settlements, CEO transition cash costs,
remeasurement of contingent consideration, gain on settlement of
acquired receivable and additional depreciation resulting from facility
rationalization actions.

Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs
and expenses, excluding depreciation, amortization of intangible assets,
goodwill impairment, restructuring and asset impairment charges,
equity-based compensation, separation costs, transaction, transition and
integration expenses, retention earn-outs payable to former shareholders
of acquired businesses, earnout settlements, CEO transition cash costs,
remeasurement of contingent consideration and gain on settlement of
acquired receivable.

Adjusted EBITDA is defined as GAAP operating income (loss) excluding
depreciation, amortization of intangible assets, goodwill impairment,
restructuring and asset impairment charges, equity-based compensation,
separation costs, transaction, transition and integration costs,
retention earn-outs payable to former shareholders of acquired
businesses, earn-out settlements, CEO transition cash costs,
remeasurement of contingent consideration and gain on settlement of
acquired receivable.

Non-GAAP Interest Expense is defined as GAAP interest expense, excluding
accretion of contingent consideration, amortization or write-off of
issuance costs, discounts on convertible debt and interest on escheat
liability, plus the reclassification of the current period benefit
(cost) of the interest rate swaps from gain (loss) on interest rate
swaps.

Cash Taxes are defined as GAAP current income tax expense excluding
changes in reserves for unrecognized tax benefits.

Non-GAAP Diluted Weighted Average Shares Outstanding is defined as GAAP
diluted weighted average shares outstanding except for periods of a GAAP
loss. In periods of a GAAP loss, GAAP diluted weighted average shares
outstanding are adjusted to include dilutive common share equivalents
outstanding that were excluded from GAAP diluted weighted average shares
outstanding because the Company had a loss and therefore these shares
would have been anti-dilutive.

The Company’s management evaluates and makes decisions about its
business operations primarily based on Non-GAAP financial information.
Management uses Non-GAAP financial measures as the basis for
decision-making as they exclude items management does not consider to be
“core costs” or “core proceeds”. For each Non-GAAP financial measure,
the adjustment provides management with information about the Company’s
underlying operating performance that enables a more meaningful
comparison to its historical and projected financial performance in
different reporting periods. For example, since the Company does not
acquire or dispose of businesses on a predictable cycle, management
excludes the amortization of intangible assets, separation costs,
transition and integration costs, retention earn-outs payable to former
shareholders of acquired businesses, earnout settlements, CEO transition
cash costs, remeasurement of contingent consideration, TiVo Acquisition
litigation, and gain on settlement of acquired receivables from its
Non-GAAP financial measures in order to make more consistent and
meaningful evaluations of the Company’s operating expenses as these
items may be significantly impacted by the timing and magnitude of
acquisitions. Management also excludes the effect of goodwill
impairment, restructuring and asset impairment charges, expenses in
connection with the extinguishment or modification of debt, gain on the
settlement of acquired receivable, additional depreciation resulting
from facility rationalization actions, other-than-temporary impairment
losses on strategic investments, gains on the sale of strategic
investments and changes in escheat liability. Management excludes the
impact of equity-based compensation to provide meaningful supplemental
information that allows investors greater visibility to the underlying
performance of our business operations, facilitates comparison of our
results with other periods, and may facilitate comparison with the
results of other companies in our industry, as well as to provide the
Company’s management with an important tool for financial and
operational decision-making and for evaluating the Company’s performance
over different periods of time. Due to varying valuation techniques,
reliance on subjective assumptions and the variety of award types and
features that may be in use, we believe that providing Non-GAAP
financial measures excluding equity-based compensation allows investors
to make more meaningful comparisons between our operating results and
those of other companies. Management excludes the accretion of
contingent consideration, amortization or write-off of note issuance
costs and discounts on convertible debt, mark-to-market adjustments for
interest rate swaps and interest on escheat liability when management
evaluates the Company’s expenses. Management reclassifies the current
period benefit (cost) of the interest rate swaps from gain (loss) on
interest rate swaps to interest expense in order for Non-GAAP Interest
Expense to reflect the effects of the interest rate swaps as these
interest rate swaps were entered into to control the effective interest
rate the Company pays on its debt.

Management uses these Non-GAAP financial measures to help it make
decisions, including decisions that affect operating expenses and
operating margin. Management believes that making Non-GAAP financial
information available to investors, in addition to GAAP financial
information, may facilitate more consistent comparisons between the
Company’s performance over time with the performance of other companies
in our industry, which may use similar financial measures to supplement
their GAAP financial information.

Management recognizes that these Non-GAAP financial measures have
limitations as analytical tools, including the fact that management must
exercise judgment in determining which types of items to exclude from
the Non-GAAP financial information. In addition, as other companies,
including companies similar to TiVo Corporation, may calculate their
Non-GAAP financial measures differently than the Company calculates its
Non-GAAP financial measures, these Non-GAAP financial measures may have
limited usefulness to investors when comparing financial performance
among companies. Management believes, however, that providing Non-GAAP
financial information, in addition to GAAP financial information,
facilitates consistent comparison of the Company’s financial performance
over time. The Company provides Non-GAAP financial information to the
investment community, not as an alternative, but as an important
supplement to GAAP financial information; to enable investors to
evaluate the Company’s core operating performance in the same way that
management does. Reconciliations for each Non-GAAP financial measure to
its most directly comparable GAAP financial measure are provided in the
tables below.

About TiVo Corporation

TiVo (NASDAQ: TIVO) is a global leader in entertainment technology and
audience insights. From the interactive program guide to the DVR, TiVo
delivers innovative products and licensable technologies that
revolutionize how people find content across a changing media landscape.
TiVo enables the world’s leading media and entertainment providers to
deliver the ultimate entertainment experience. Explore the next
generation of entertainment at tivo.com, forward.tivo.com or follow us
on Twitter @tivo or @tivoforbusiness.

Forward Looking Statements

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, future growth, profitability and success
of the Company’s Product and IP Licensing businesses, the success of the
Company’s plans to separate the Product and IP Licensing businesses into
two independent companies, the realization of stockholder value
resulting from separation of the businesses, growth of certain markets
for intellectual property licensing, as well as future business
strategies, future product offerings and deployments, and technology and
intellectual property licenses with various customers. These
forward-looking statements are based on TiVo’s current expectations,
estimates and projections about its business and industry, management’s
beliefs and certain assumptions made by the company, all of which are
subject to change. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as, “future”,
“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, whether inside or outside the
Company’s control, in the Company’s exploration of its strategic
alternatives, delays in development, addressing any impact of the
Separation and the Distribution on our existing credit facilities and
convertible notes, the failure to deliver competitive service offerings
and lack of market acceptance of any offerings delivered, as well as the
other potential factors described under “Risk Factors” included in
TiVo’s Quarterly Report on Form 10-Q for the three months ended March
31, 2019 and Annual Report on Form 10-K for the year ended December 31,
2018 and other documents of TiVo Corporation on file with the Securities
and Exchange Commission (available at www.sec.gov).
TiVo 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 assumes no obligation to update any forward-looking
statements in order to reflect events or circumstances that may arise
after the date of this release, except as required by law.

   
TIVO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended March 31,
2019   2018
Revenues, net:
Licensing, services and software $ 156,161 $ 186,158
Hardware 2,074   3,679  
Total Revenues, net 158,235 189,837
Costs and expenses:
Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets
39,433 43,215
Cost of hardware revenues, excluding depreciation and amortization
of intangible assets
4,093 5,051
Research and development 41,381 48,430
Selling, general and administrative 45,993 51,082
Depreciation 5,364 5,141
Amortization of intangible assets 28,178 41,412
Restructuring and asset impairment charges 1,813   4,546  
Total costs and expenses 166,255   198,877  
Operating loss (8,020 ) (9,040 )
Interest expense (12,161 ) (11,634 )
Interest income and other, net 1,775 1,566
(Loss) gain on interest rate swaps (1,721 ) 4,311
Loss on debt extinguishment (199 )  
Loss from continuing operations before income taxes (20,326 ) (14,797 )
Income tax expense 6,318   4,217  
Loss from continuing operations, net of tax (26,644 ) (19,014 )
Income from discontinued operations, net of tax   1,297  
Net loss $ (26,644 ) $ (17,717 )
 
Basic loss per share:
Continuing operations $ (0.21 ) $ (0.16 )
Discontinued operations   0.01  
Basic loss per share $ (0.21 ) $ (0.15 )
Weighted average shares used in computing basic per share amounts 124,422 122,080
 
Diluted loss per share:
Continuing operations $ (0.21 ) $ (0.16 )
Discontinued operations   0.01  
Diluted loss per share $ (0.21 ) $ (0.15 )
Weighted average shares used in computing diluted per share amounts 124,422 122,080
 
Dividends declared per share $ 0.18 $ 0.18
 

See notes to the Condensed Consolidated Financial Statements in our
Quarterly Report on Form 10-Q.

     
TIVO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 

March 31,
2019

December 31,
2018

ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 113,182 $ 161,955
Short-term marketable securities 158,739 158,956
Accounts receivable, net 156,470 152,866
Inventory 6,146 7,449
Prepaid expenses and other current assets 33,130   30,806  
Total current assets 467,667 512,032
Long-term marketable securities 55,058 73,207
Property and equipment, net 51,301 53,586
Intangible assets, net 489,715 513,770
Goodwill 1,544,306 1,544,343
Right-of-use assets 65,419
Other long-term assets 63,152   63,365  
Total assets $ 2,736,618   $ 2,760,303  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 104,206 $ 104,981
Unearned revenue 49,899 46,072
Current portion of long-term debt 330,481   373,361  
Total current liabilities 484,586 524,414
Unearned revenue, less current portion 52,906 54,495
Long-term debt, less current portion 619,396 618,776
Deferred tax liabilities, net 44,498 45,030
Long-term lease liabilities 66,927
Other long-term liabilities 10,275   24,647  
Total liabilities 1,278,588 1,267,362
Stockholders’ equity:
Preferred stock
Common stock 127 126
Treasury stock (33,521 ) (32,124 )
Additional paid-in capital 3,232,310 3,239,395
Accumulated other comprehensive loss (3,655 ) (3,869 )
Accumulated deficit (1,737,231 ) (1,710,587 )
Total stockholders’ equity 1,458,030   1,492,941  
Total liabilities and stockholders’ equity $ 2,736,618   $ 2,760,303  

See notes to the Condensed Consolidated Financial Statements in our
Quarterly Report on Form 10-Q.

 

TIVO CORPORATION AND SUBSIDIARIES

REVENUE AND SEGMENT DETAILS

(In thousands)

(Unaudited)

 
  Three Months Ended March 31,
2019   2018
Total Revenues, net $ 158,235 $ 189,837
Legacy TiVo Solutions IP Licenses (8,884 )
Hardware (2,074 ) (3,679 )
Other Products (364 ) (2,433 )
Core Revenue (excludes revenue from Legacy TiVo Solutions IP
Licenses, Hardware and Other Products)
$ 155,797   $ 174,841  
 
Three Months Ended March 31,
2019 2018
Product Revenue
Platform Solutions $ 71,037 $ 95,940
Software and Services 19,902 18,479
Other 364   2,433  
Total Product Revenue, net 91,303 116,852
 
IP Licensing Revenue
US Pay TV Providers 42,117 49,915
CE Manufacturers 8,618 8,968
New Media, International Pay TV Providers and Other 16,197   14,102  
Total IP Licensing Revenue, net 66,932 72,985
   
Total Revenues, net $ 158,235   $ 189,837  
 
Three Months Ended March 31,
2019 2018
Total Product Revenue, net $ 91,303 $ 116,852
Hardware (2,074 ) (3,679 )
Other Products (364 ) (2,433 )
Core Product Revenue (excludes revenue from Hardware and Other
Products)
$ 88,865   $ 110,740  
 
Total IP Licensing Revenue, net $ 66,932 $ 72,985
Legacy TiVo Solutions IP Licenses   (8,884 )
Core Intellectual Property Licensing Revenue (excludes revenue from
Legacy TiVo Solutions IP Licenses)
$ 66,932   $ 64,101  
 
Three Months Ended March 31,
2019 2018
Adjusted EBITDA:
Product $ 8,413 $ 27,386
IP Licensing 45,125 47,628
Corporate (16,097 ) (16,048 )
Adjusted EBITDA $ 37,441   $ 58,966  
 
 

TIVO CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(In thousands)

(Unaudited)

 
  Three Months Ended March 31,
2019   2018
GAAP (loss) income from continuing operations before income taxes $ (20,326 ) $ (14,797 )
Amortization of intangible assets 28,178 41,412
Restructuring and asset impairment charges 1,813 4,546
Equity-based compensation 8,379 12,024
Separation costs 1,132
Transition and integration costs 595 2,410
Earnout amortization 958
CEO transition cash costs 625
Remeasurement of contingent consideration 890
Loss on debt extinguishment 199
Change in escheat liability 165
Accretion of contingent consideration 78
Amortization of note issuance costs 598 559
Amortization of convertible note discount 3,409 3,254
Mark-to-market loss (income) related to interest rate swaps 1,625 (5,694 )
Interest on escheat liability (418 )  
Non-GAAP Pre-tax Income $ 25,349   $ 46,265  
 
Three Months Ended March 31,
2019 2018
GAAP Diluted weighted average shares outstanding 124,422 122,080
Dilutive effect of equity-based compensation awards 701   515  
Non-GAAP Diluted Weighted Average Shares Outstanding 125,123   122,595  
 
Three Months Ended March 31,
2019 2018
GAAP Cost of licensing, services and software revenues, excluding
depreciation and amortization of intangible assets
$ 39,433 $ 43,215
Equity-based compensation (968 ) (1,109 )
Transition and integration costs (222 ) (28 )
Non-GAAP Cost of Licensing, Services and Software Revenues $ 38,243   $ 42,078  
 
Three Months Ended March 31,
2019 2018
GAAP Cost of hardware revenues, excluding depreciation and
amortization of intangible assets
$ 4,093 $ 5,051
Equity-based compensation (30 )  
Non-GAAP Cost of Hardware Revenues $ 4,063   $ 5,051  
 
Three Months Ended March 31,
2019 2018
GAAP Research and development expenses $ 41,381 $ 48,430
Equity-based compensation (2,134 ) (3,582 )
Transition and integration costs (408 ) (716 )
Earnout amortization   (184 )
Non-GAAP Research and Development Expenses $ 38,839   $ 43,948  
 
Three Months Ended March 31,
2019 2018
GAAP Selling, general and administrative expenses $ 45,993 $ 51,082
Equity-based compensation (5,247 ) (7,333 )
Separation costs (1,132 )
Transition and integration costs 35 (1,666 )
Earnout amortization (774 )
CEO transition cash costs (625 )
Remeasurement of contingent consideration   (890 )
Non-GAAP Selling, General and Administrative Expenses $ 39,649   $ 39,794  
 
Three Months Ended March 31,
2019 2018
GAAP Total operating costs and expenses $ 166,255 $ 198,877
Depreciation (5,364 ) (5,141 )
Amortization of intangible assets (28,178 ) (41,412 )
Restructuring and asset impairment charges (1,813 ) (4,546 )
Equity-based compensation (8,379 ) (12,024 )
Separation costs (1,132 )
Transition and integration costs (595 ) (2,410 )
Earnout amortization (958 )
CEO transition cash costs (625 )
Remeasurement of contingent consideration   (890 )
Non-GAAP Total COGS and OpEx $ 120,794   $ 130,871  
 
Three Months Ended March 31,
2019 2018
GAAP Operating loss $ (8,020 ) $ (9,040 )
Depreciation 5,364 5,141
Amortization of intangible assets 28,178 41,412
Restructuring and asset impairment charges 1,813 4,546
Equity-based compensation 8,379 12,024
Separation costs 1,132
Transition and integration costs 595 2,410
Earnout amortization 958
CEO transition cash costs 625
Remeasurement of contingent consideration   890  
Adjusted EBITDA $ 37,441   $ 58,966  
 
Three Months Ended March 31,
2019 2018
GAAP Interest expense $ (12,161 ) $ (11,634 )
Accretion of contingent consideration 78
Amortization of note issuance costs 598 559
Amortization of convertible note discount 3,409 3,254
Reclassify current period cost of interest rate swaps (97 ) (1,383 )
Interest on escheat liability (418 )  
Non-GAAP Interest Expense $ (8,669 ) $ (9,126 )
 
   
TIVO CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FORECAST FINANCIAL INFORMATION
(In millions)
(Unaudited)
 
FY 2019 Expectations
Low   High
GAAP loss from continuing operations before income taxes $ (75 ) $ (87 )
Amortization of intangible assets 113 113
Restructuring and asset impairment charges 2 3
Equity-based compensation 36 38
Separation costs 25 40
Transition and integration costs 1 1
Amortization of note issuance costs and convertible note discount 16 16
Mark-to-market loss related to interest rate swaps (1) 2   2  
Non-GAAP Pre-tax Income (1) $ 120   $ 126  
 
Cash Taxes $ 28 $ 29
 

(1) Due to their nature, changes in the mark-to-market of interest rate
swaps have only been included in the outlook to the extent they have
already occurred. Actual results may differ materially from the outlook.

 
  FY 2019 Expectations
Low   High
GAAP Operating loss $ (29 ) $ (41 )
Depreciation 23 23
Amortization of intangible assets 113 113
Restructuring and asset impairment charges 2 3
Equity-based compensation 36 38
Separation costs 25 40
Transition and integration costs 1   1  
Adjusted EBITDA $ 172   $ 178  
 
FY 2019 Expectations
GAAP Diluted weighted average shares outstanding 126
Dilutive effect of equity-based compensation awards 1
Non-GAAP Diluted Weighted Average Shares Outstanding 127