TiVo Comments on Marketing and Sales Effort (TIVO 3Q05 Conf Call Quotes)

TiVo stock dropped about 10% last night after announcing 3Q05 results, but has rebounded 5% in the pre-market this morning upon news of a partnership with Intel on its upcoming Viiv entertainment PC platform, and a positive analyst's note from Citigroup. Here are the key numbers from TiVo's report, and excerpts from the conference call:

New subscribers: 434,000 (379,000 from DirecTV subs mostly from large TiVo rebates)

Total subscribers: Just over 4 million

Earnings: Net loss $14.2 million, or 17 cents per share (3Q04: loss of $26.4 million, or 33 cents per share)

Service and technology revenue: $43.2 million (3Q04: $28.4m)

Hardware revenue (sales of TiVo DVRs): $24.7 million (3Q04: $27.9m)

Gross margin: $16.4 million (3Q04: $1.9 million)

Subscription acquisition cost per gross add (SAC): $308 ($275 in 3Q04)

Guidance for 4Q05: net loss of $17 million to $22 million

In the conference call, TiVo CEO Tom commented on the company's unique marketing and sales efforts:

we are seeing online programs be by far our most efficient customer acquisition tool. We are now testing just how much volume can potentially be driven from ramping up the level of spend in this media given its efficiency… while it's still early in our testing, we are finding that explaining the product in greater depth clearly increases the level of response. Consumers have generally heard of TiVo but do not always understand why they should subscribe. Our direct response television efforts have shown the longer the explanation, the greater the response. Two minute ads are more effective than one minute ads, 30-minute infomercials are the most effective of all. ..

What we have tested -- and we are going to continue to test it more actively because the results were very encouraging --was an offer with no upfront box fee but a higher monthly service fee. And with a significantly higher fee but no need to pay for the box, we did see the conversion rates when people called and then had to decide whether to sign up. Those conversion rates on the decision to sign up were substantially higher with the only monthly fee approach.

(Quotes are from the CCBN StreetEvents transcript.)

Related:

• All articles on The Consumer Electronics Stock Blog on TIVO and on TV.