Ahead of Tuesday's FQ2 report, Brean's Todd Mitchell predicts TiVo (TIVO +1.5%) will continue seeing positive trends "through the remainder of fiscal 2015, as TiVo's value proposition is resonating with its core customer base who are facing an increasingly challenging competitive dynamic and accelerating investment in their service profile."
Mitchell also sees the Digitalsmiths acquisition laying the foundation for a healthy cloud services businesses. He cautions TiVo will ultimately need new distributions deals with major MSOs to "generate upside to the company's current valuation," but also notes such a deal (with a European MSO) has been rumored to be in the pipeline.
Back in July, Mitchell declared (following an agreement with Canada's Cogeco) new deals with tier-2 U.S. cable companies were likely. Shares are close to their 52-week high of $14.25.
Canadian MSO Cogeco Cable is abandoning an in-house IPTV project and will instead roll out a multi-screen TiVo (TIVO +3.4%) DVR/video-streaming solution to its 800K video subs. The rollout is expected to start by March '15.
The deal is TiVo's first with a Canadian pay-TV provider. Last year, Cogeco's Atlantic Broadband unit began offering a TiVo-powered service.
Brean and Piper are out with bullish notes predicting additional deals. Brean's Todd Mitchell expects TiVo to "announce further deals with tier-2 U.S. cable companies where it is becoming the de facto standard for TV Everywhere," and also thinks "a more comprehensive deal with a large European cable company" is possible by September.
TiVo added 341K MSO subs in the April quarter, and closed it with 4.54M total subs (3.58M MSO, 957K TiVo-owned). Virgin Media accounts for 2.1M of the MSO subs.
Thanks to strong MSO-related subscriber growth, TiVo's (TIVO +2.7%) subscriber base has now surpassed its Dec. '06 record of 4.45M.
The DVR maker had 4.2M subs (+34% Y/Y) at the end of its January quarter. 313K MSO subs were added during the quarter, along with 6K TiVo-owned subs. The company's ARPU for MSO subs ($1.26) remains well below its ARPU for TiVo-owned subs ($8.56).
TiVo's (TIVO +6.6%) FQ4 results were mixed, and ifs FQ1 revenue guidance ($85M-$87M) is below an $87.6M consensus. But the company added 313K MSO subs during the quarter, up from 295K in FQ3, and saw its total sub base rise 34% Y/Y to 4.2M.
TiVo has also added $100M to its buyback, raising its total authorization to $186M. $20M was spent on buybacks in FQ4.
TiVo-owned subs grew by 6K after declining by 21K in FQ4. TiVo-owned churn fell to 1.5% from FQ3's 1.8%. TiVo-owned monthly ARPU rose a penny Q/Q to $8.56, MSO ARPU rose $0.23 to $1.26.
Virgin Media's U.K. ops accounts for over 2M of TiVo's 3.2M MSO subs, but the company's efforts to diversify are bearing fruit. Spanish cable provider ONO added 65K TiVo subs in FQ4, and Sweden's Com Hem has added 38K within three months of its TiVo launch.
TiVo stated on its CC (transcript) it expects recently-acquired Digitalsmiths to post double-digit growth for the next several years.
RF Micro (RFMD -2.4%) has been cut to Hold by Canaccord, and to Neutral by D.A. Davidson, after soaring yesterday in response to news it's merging with RF component rival TriQuint (TQNT -0.9%). TriQuint has also been cut to Neutral by D.A. Davidson, and upgraded to Buy by Brean.
TiVo (TIVO +1.1%) has been started at Outperform by Northland.
RealPage (RP -22.7%) has been cut to Sector Perform by RBC after posting mixed Q4 results and providing soft 2014 guidance (revenue of $440M-$450M and EPS of $0.65-$0.69 vs. a consensus of $459.7M and $0.76).
Datawatch (DWCH +6.1%) has been started at Outperform by Cowen.
Digitalsmiths relies on user viewing and search activity (among other things) to offer personalized content recommendations. The company claims to have 46 U.S. and international clients, including 7 of the top-10 U.S. pay-TV providers.
TiVo states Digitalsmiths' current user base amounts to just 10% of "the total potential user base licensed under its current contracts," and expects the figure to rise to 50% within the next few years.
The deal gives TiVo another product to sell to pay-TV providers, as well as $20M in net operating losses (NOLs) it can use to cut its tax bill.
Separately, TiVo says it's adding $100M to its buyback plan. That raises TiVo's total authorization to $186M (good for repurchasing 12% of shares at current levels).
Goldman's Heather Bellini has cut TiVo (TIVO -3.8%) to Neutral, and lowered her PT to $14.50 from $16. She's worried about a dearth of new cable deal opportunities, and expects EBITDA margins (exc. licensing settlement payments) to be pressured by "[subscriber] growth challenges."
Bellini's FY15 (ends Jan. '15) EBITDA forecast has been lowered to $102M from $105M (consensus is at $115M), and her FY14-16 EPS estimates have also been cut.
Bearish on $TIVO into earnings today after the bell. $SPY
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Vegas Ben+ FollowFollowing- Unfollow|Send Message27 Aug 2013
: Agreed! Too much competition!
TIVO vs. ETF Alternatives
Tivo, Inc. develops and provides software, technology, in-home, and outside-of-the-home cloud-based video solutions for DVRs, non-DVR set-top boxes, tablets, smartphones, and other consumer electronics.