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TiVo reported higher revenues, more subscribers and a victory in its ongoing patent suit with EchoStar, but also noted greater loss for its fiscal first quarter, ended April 30.
Service and technology revenues for the quarter, which includes recognition of Comcast development revenue of $7.2 million, increased 38 percent to $55.1 million, compared with $40.0 million for the same period last year. Total subscriptions at the end of the quarter were slightly more than 4.4 million, which represents 33 percent growth in the subscription base during the past year.
For the quarter, TiVo reported a net loss of $10.7 million, compared with a net loss of $857,000 the first quarter of last year, due primarily to the costs associated with litigation, more aggressive price offerings and the expensing of stock options.
One of those court cases was its patent infringement suit against EchoStar. The satellite TV provider said in a separate statement that it was “pleased that the United States Patent and Trademark Office (USPTO) rejected many of TiVo's patent claims as invalid. That reexamination ruling, together with the favorable decision from the Court of Appeals earlier this month (finding that the Texas court abused its discretion in connection with key trial evidence withheld from the jury) are steps in the right direction we prepare our response to TiVo's recently filed injunction motion.”
TiVo responded by saying, “The level of misleading spin that EchoStar is putting out with respect to our patent case against them is quite extraordinary.” TiVo said that it was pleased that the USPTO “confirmed the validity” of most of the 61 claims it re-examined. As for those claims USPTO rejected, TiVo said it should “in no way impact the jury verdict.”
Tom Rogers, TiVo's CEO said in the company's financial statement, “Our lawsuit victory against EchoStar was important for us as it recognizes that our intellectual property is valuable and provides further incentive for other companies to enter into commercial arrangements with TiVo in addition to the other benefits TiVo has to offer.”
For the quarter, 91,000 gross TiVo-owned subscriptions were added, compared with 104,000 in the first quarter of last year. But TiVo noted that this was the second sequential quarter showing a trend in which the percentage of new subscriptions compared to a year ago have improved.
Stand-alone churn remained at 0.9 percent per month, resulting in a gain of 51,000 net new TiVo-owned subscriptions. Separately, TiVo added a small number of new DirecTV TiVo subscriptions, primarily subscribers using the TiVo high-definition DVR product, currently DirecTV's only HD DVR. However, churn on the DirecTV TiVo subscription base was roughly equal to these new additions, leading to a net number of new subscriptions in the first quarter of 2,000.
Rogers commented, “We continue to see steady progress in many areas of our business strategy. We are making strides in both product innovations and marketing initiatives and are becoming an increasingly strong partner for advertisers. While we still have plenty of work to do, we saw improvements in service and technology revenue as well as our subscription base.
He added, “We continue to develop innovative features that clearly differentiate TiVo from the many generic DVRs on the market.”
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