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TiVo Reports Higher Sales, But Wider Loss

9/04/2006 02:00:00 AM Eastern

TiVo reported higher service and technology revenues for its fiscal second quarter but a higher loss than the same time last year.

Service and technology revenues increased 30 percent to $52.9 million for the quarter ended July 31, compared to $40.7 million for the same period last year. TiVo reported a net loss of $6.4 million for the quarter, compared to a net loss of $900,000 for the second quarter last year.

The higher year-over-year net loss was due primarily to the costs associated with our intellectual property patent litigation, more upfront hardware costs from the change to zero upfront pricing, and the expensing of stock options, the company said.

TiVo-owned subscription gross additions were 74,000 for the quarter, a 4 percent decrease compared to 77,000 in the second quarter of last year. This is the third sequential quarter showing a trend in which the percentage of new subscriptions compared to a year ago have improved. It should be noted again that there were no meaningful advertising expenditures during the quarter.

TiVo also reported 30,000 new net TiVo-owned subscriptions. This figure was impacted by a slightly improved year-over-year churn rate set against a higher average subscription base, resulting in an additional 7,000 churn compared to last year. As expected, TiVo reported a net decline in the number of DirecTV TiVo subscriptions during the period, against several thousand per month of new TiVo subscriptions that were still being added by DirecTV during the quarter. Total subscriptions as of July 31 were up slightly from last quarter to more than 4.4 million, and up 24 percent over the year-ago subscription totals.

Tom Rogers, CEO of TiVo said, “We continue to see progress with the new pricing and packaging offerings online, as online sales increased sequentially as a percentage of total sales from 29 to 33 percent, improving margins and giving us an ability to capitalize on this very efficient form of distribution.

He added that recent pricing changes to the three-year bundle offer online have substantially increased the number of subscribers electing the three-year bundle option, “delivering significantly higher upfront cash and locking in these subscribers for at least three years.”

For the quarter, the TiVo Series2 Dual-Tuner box represented approximately 54 percent of all sales to subscribers and just under 50 percent of our TiVo-owned subscriptions come from analog markets, where “we remain the only DVR solution for this important segment,” Rogers said.

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