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TiVo released Q215 earnings that generally met analyst estimates.

The stock remains cheap and a definite buy on a breakout above $14.

In the original investment thesis, it was anticipated that investors would only buy the stock once it traded above $14.

TiVo (NASDAQ:TIVO) recently released the Q215 earnings report. The leader in next-generation television service reported mixed results with Q2 numbers that beat estimates and generally lower guidance for Q3. The stock had a muted reaction due to the company also announcing the approval of a $350 million share buyback. A buyback that equals roughly 20% of the current market cap of $1.6 billion and includes the plans to repurchase at least $100 million worth of stock during the remainder of fiscal 2015 that ends in January. TiVo ended Q2 with $782 million of cash on hand.

TiVo reported for the quarter ended July 31 that service and technology revenue grew 13% YoY to $86.6 million generating net income of $9.3 million, or $0.08 per share. Total income and adjusted EBITDA soared with a slight reduction in costs while generating the stated revenue growth. Adjusted EBITDA excluding litigation costs and proceeds soared to $31.1 million, up 73% from $18.0 million in the prior-year period. The company saw MSO-subscriptions soar 283,000, but TiVo-owned subs dropped roughly 20,000 sequentially. Total subscriptions hit 4.8 million with MSOs reaching 3.9 million based on 33% growth YoY. The guidance for Q315 revenue in the range of $86 million to $89 million was below the analyst targets of $89.5 million. Likewise, the guidance is for net income to decline sequentially more than expected.

The original investment thesis in the article "TiVo: Heading Into A Cloud Of Profits" suggested that investors buy the stock close to breakout levels around $14. At the time, the stock was trading at $13 and facing overhead resistance and a lot of doubts from the investment community. The updated Q2 numbers including the strong cash balance continue to back the thesis that the stock is incredibly cheap. Investors should own the stock if it breaks out above $14, especially considering it is backed by a rather large stock buyback and only trades at roughly 8x adjusted EBITDA with decent growth opportunities.