NEW YORK: TiVo Inc. on Tuesday reported a 12% increase in third-quarter revenue on record subscribers’ additions and more distribution agreements, but higher costs continued to eat away at its profit.
For the current quarter, however, TiVo estimated it will book a charge of $11 million to $12 million tied to the previously announced exit of its chief executive, who will stay on as board chairman. TiVo projected the charge will push it into a $5 million to $8 million net loss in the fourth quarter on $101 million to $104 million in revenue.
Analysts surveyed by Thomson Reuters had projected profit of $9.1 million on $102.6 million in revenue, according to Thomson Reuters.
Founded in 1997, the San Jose, Calif., company revolutionized the way television is watched by introducing a digital video recorder, allowing viewers to easily record programs, skip commercials and rewind, freeze and fast-forward through shows and movies. To stay competitive, TiVo struck distribution agreements with come of its competing pay-TV carriers and video-streaming services and developed technology that allows subscribers to grab video off the web and traditional broadcast or cable channels. In September, it introduced its latest recorder: the Bolt.
TiVo, which makes a significant amount of revenue from patent settlement agreements that are scheduled to expire starting in 2018, has also added cloud-based media services and expanded abroad.
In the latest period, it added about 429,000 subscriptions in the latest period, ending the quarter with more than 6.5 million, up 26% from the year-ago period and 7% from the previous quarter.
Chief Executive Tom Rogers said TiVo now has more than four million subscribers abroad, driven by additions from Vodafone Spain and Virgin Media, and bolstered by a new deal with Millicom in Latin America.
The churn rate, or the percentage of subscribers who terminated service, was 1.4%, down from 1.6% from the year earlier.
Overall, for the quarter ended Oct. 31, TiVo reported a profit of $5.3 million, down from $6.3 million a year earlier. On a per-share basis, profit was unchanged at six cents as the latest period had 17% fewer outstanding shares than the year earlier.
Net revenue rose 12% to $132.3 million, topping the company’s guidance of $100 million to $103 million
Services and software revenue, a closely watched metric that excludes hardware sales, rose 22% to $44.7 million.
Gross margin narrowed to 55.4% from 58% a year earlier.
