TiVo's (TIVO) CEO Tom Carson on Q4 2016 Results - Earnings Call Transcript

| About: TiVo Inc. (TIVO)
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TiVo Inc. (NASDAQ:TIVO) Q4 2016 Results Earnings Conference Call February 15, 2017 5:00 PM ET

Executives

Peter Ausnit - VP, IR

Tom Carson - President and CEO

Peter Halt - CFO

Samir Armaly - EVP, Intellectual Property and Licensing

Pete Thompson - COO

Analysts

Mike Olson - Piper Jaffray

Ugam Kamat - JPMorgan

Rob Stone - Cowen and Company

Eric Wold - B. Riley

Operator

Good afternoon. My name is Jesse and I will be your conference operator today. At this I would like to welcome everyone to the TiVo Corporation 2016 Fourth Quarter and Year End Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Peter Ausnit, Vice President of Investor Relations.

Peter Ausnit

Operator, thank you. Good afternoon, everyone and thank you for joining our call. I'm Peter Ausnit, TiVo's Vice President of Investor Relations. Today I’m joined by our President and CEO, Tom Carson, and our Chief Financial Officer, Peter Halt. Additionally our Chief Operating Officer, Pete Thompson and our EVP of Intellectual Property, Samir Armaly will be available during Q&A.

We just distributed a press release and an 8-K detailing our fourth quarter and full year 2016 financial results. In addition we posted a downloadable model on our IR site showing our historical financial results and non-GAAP to GAAP reconciliation. After the conclusion of this call you will be able to access a recording of this call on our website at tivo.com.

Our prepared remarks will last about 20 to 25 minutes followed by a question-and-answer session. For purposes of this call when we refer to TiVo Inc. we are referring to the legacy TiVo Inc. entity and its business that was renamed TiVo Solutions Inc. after the acquisition by Rovi.

Our discussion includes forward-looking statements about TiVo's future business, licensing, product, and growth strategy. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements as described in our Risk Factors in our reports filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them except as required by law.

With that I’ll now turn the call over to our CEO, Tom Carson. Tom?

Tom Carson

Thank you, Peter. Good afternoon everyone and thank you for joining our fourth quarter earnings call.

I’d like to start our call by highlighting our key accomplishments in Q4 and for the full year of 2016, as well as our thoughts on capital allocation, then Peter Halt will discuss our fourth quarter financial results and our 2017 fiscal year estimates. I'll close with our priorities for 2017 and some of the goals we look forward to achieve in this year. We'll then open up the call for questions.

In terms of Q4 I am pleased to report that we had a very good quarter with strong revenue, aggressive cost management and solid earnings resulting in a year where we exceeded our internal plan for all three measures.

In the area of intellectual property, a key accomplishment in Q4 was our Samsung deal, a five-year plus agreement that demonstrates the relevance and value of our patents in the growing mobile space and reinforces the value of the acquired TiVo patterns. We also signed strategically important agreements with Netflix and HBO that illustrate our growing momentum in the over the top or OTT space.

2016 accomplishment also included important intellectual property agreements with DISH and Verizon. In addition to high margins and strong cash flow, our licensing business has excellent multiyear visibility, thanks to major long-term licenses including our seven-year agreement with AT&T and our 10-year agreement with DISH. As a result, we finished 2016 with IP license agreements with nine of the top 10 U.S. pay-TV providers.

In our product business, our fourth quarter achievements include an unprecedented product partnership with Netflix that allows TiVo to continue integrating Netflix into TiVo power set top boxes while broadening the two company's relationship. We believe our customers will benefit from the integrated offering which includes unified search results across the entire content catalogue.

In Q4, Virgin Media launched a new 4K ultra high definition set top box power by TiVo software including wide functionality. This comes on the heels of last quarter's launch of TiVo Bolt+, a best-in-class all-in-one multi-room entertainment device with six tuners and 3 terabytes recording capacity for customers looking for the ultimate in video entertainment.

Additionally in Q3 TiVo announced next generation of TiVo user experience which enables consumers to find content more quickly and with less effort from a diverse array of sources. I'm proud to tell everyone that a large international service provider will deploy this next generation TiVo user experience in early 2017. I believe this clearly demonstrates the innovation and product leadership that excited us about acquiring TiVo Incorporated.

This past quarter we also expanded our global reach by adding Reliance Jio who plans to deploy our CuBi TV solution to serve India's rapidly growing market for advanced TV experiences. In the area of advanced search, during the year DISH launched TiVo's conversational services on their new voice remote. And recently our metadata team converted the TiVo platform to our metadata solution in four months. This rapid conversion included 170,000 video assets, 23,000 channels and 9200 line-ups.

For the year we ended with tens of millions of consumers using our discovery products around the globe. Approximately 23 million household now use our television discovery experiences and within this footprint TiVo service households grew 15% in 2016 to over 6 million.

Further, over 30 million household use our advanced search and recommendations software and generate over 5 billion calls to our service each month. And we have over 500 customers using our metadata in discovery applications on set-top boxes, mobile devices and websites.

Lastly, we made significant progress with our analytics business in the fourth quarter including the expansion of our agreement with one of the largest network families in the U.S. We're also exploring new opportunities in other segments including pilot projects with advertising agencies and directly leading brand advertisers.

In 2016 we also completed our key strategic imperative to combine two proven innovators to perform the new TiVo, a global entertainment discovery technology leader. Regarding the TiVo integration as mentioned on our last call, we are on track to achieve over 100 million in annual cost synergies. We exceeded our synergy targets in Q4 contributing to our Q4 results and we are on track to achieve at least 65% of our total synergy expectations with actions taken by September 2017.

I'm very pleased with our performance in 2016, a year cap with great financial results, numerous key licensing deals being completed, expansion of our product and customer base and the TiVo acquisition. I feel strongly that our company is well positioned in our markets and is poised for future growth.

In that regards based on our strong results, solid balance sheet, long-term licensing arrangements, recurring product and IP revenue models, and the progress towards the targeted 100 million in cost synergies I feel confident in TiVo's ability to continue to generate substantial cash flows.

So today, I am pleased to announce that TiVo is initiating a quarterly dividend of $0.18 per share payable to stockholders of record on March 1, 2017. Our Board believes it can reward our stockholders with a meaningful quarterly dividend while maintaining ample capacity for the company to invest in the business, pursue our long-term growth aspirations and consider additional capital allocation alternatives such as opportunistic stock repurchases.

On that front, the Board also increased the company's stock repurchase authorization to $150 million. Pursuant to our strategy of allocating excess capital to the highest risk-adjusted return, the Board will continue to regularly review all available capital allocation opportunities.

Now Peter Halt will discuss our Q4 results both on capital allocation and our estimates for 2017.

Peter Halt

Thank you, Tom.

Fourth quarter revenues were $252 million, an increase of $99 million or 65% from the third quarter and an increase of $103 million or 69% from the fourth quarter of 2015. Revenue growth in the fourth quarter was primarily driven by a full quarter of TiVo Inc. and the benefits in Q4 from Samsung catch-up revenues. This compares to 23 days of TiVo Inc. in the third quarter and none in the fourth quarter of 2015.

This quarter we are introducing a new approach to how we present product revenues. We believe this approach provides investors better insight in how we manage our business, as well as how our product group contributes to our overall growth. We will now breakout product revenues based upon our various business models. The three business models are platform solutions, software and services and other.

Platform Solutions includes our IPG products such as licensing the integrated TiVo service solution and selling TiVo enabled DVR and non-DVR products to service providers. Additionally, it includes our Cubiware television middleware solutions, as well as our consumer electronic device guides, and consumer guide products. Hardware revenues are also included in Platform Solutions. That said, hardware revenues and COGS will continue to be broken out separately in our income statement.

The second business model is Software and Services which includes licensing our metadata advanced search and recommendation, advertising and data analytics products. These are best-of-breed offerings for both our guide customers and those who choose to build their own or license others guide products.

Finally our other revenue category continues to consist of our legacy ACP or analog content protection business and other analog offerings. With this approach in mind, let's discuss our Q4 2016 results in detail.

On the IP licensing front, revenues of $140 million were up $51 million from Q4 2015. This was primarily due to including $68 million in TiVo Inc. licensing revenues and the benefit of the Samsung catch-up payment. While our Q4 2015 had no TiVo revenues, it did benefit from catch-up payments from AT&T.

IP licensing revenues and service providers of $104 million were up $32 million from Q4 2015. IP licensing revenues from consumer electronics manufacturers of $36 million were up $19 million from Q4 2015. In both cases this was primarily due to revenues from TiVo Inc. and catch-up payments during the quarter.

Products revenues of $112 million were up $52 million from Q4 2015. This was primarily due to TiVo Inc. contributing $58 million in revenues in Q4 2016 partially offset by a drop in advertising revenues largely due to the loss of Comcast.

Within product revenues, platform solutions revenues of $86 million were up $51 million in Q4 2015. TiVo Inc. contributed $53 million in platform solutions revenues in Q4. Software and services revenues of $24 million were up $2 million from Q4 2015. While Q4 2016 included TiVo Inc. software and services revenue, this was offset by a drop in advertising revenues largely from Comcast.

The increase in software and services revenues is driven by growth in revenues from other products and legacy Rovi software and services portfolio. Other revenues of $2 million were down $1 million as expected at the legacy Rovi ACP business declined.

Turning to costs, in Q4 GAAP total operating costs and expenses of $232 million were up 103% from 114 million in Q4 2015. This was primarily due to the inclusion of a full quarter of TiVo Inc. operations.

Q4 GAAP cost includes $20 million of transaction, transition and integration costs relating to the TiVo acquisition. $42 million relating to the amortization of intangibles, and $16 million related to stock-based compensation. Non-GAAP total COGS and operating expenses including depreciation were $153 million up $71 million or 86% from Q4 2015.

While cost reductions were underway throughout the year, the acquisition of TiVo Inc. drove the year-on-year increase in cost. In terms of our fourth quarter 2016 results on a non-GAAP basis, non-GAAP pretax income of $91 million was up 57% from $58 million in the fourth quarter of 2015. Estimated cash taxes for the quarter were approximately $8.7 million, GAAP and non-GAAP diluted weighted average shares outstanding for the quarter were 119 million shares.

Our balance sheet remains very strong and provides capital allocation flexibility. As of December 31, 2016 we had $439 million in cash and investments. Last month based upon the benefits of combining Rovi and TiVo, S&P upgraded our debt to Double-B minus. We also refinanced our term loan B and reduced interest expense by approximately 3 million per year. Our leverage ratio based upon trailing 12 months adjusted EBITDA is now only 3.95.

As for cost synergies, as Tom mentioned we remain on track to achieve our goal of at least $100 million in cost synergies. We also expect to take actions to achieve at least 65% of these savings on a run rate basis within 12 months of closing or by September 2017. We benchmark these savings against the combined company's pre-close budgeted spend. In total, the two companies plan to spend $640 million this past year.

Based upon actions taken to-date, our Q4 2016 non-GAAP COGS was OpEx of $153 million annualizes to $612 million. This is $28 million less than the two companies anticipated spending at standalone entities in 2016. We plan to continue reducing our annualized cost bases each quarter during 2017.

Turning to our estimates for 2017. We will provide estimates to our revenues and pretax income, in addition to allow investors who want to calculate certain non-GAAP metrics such as non-GAAP net income and non-GAAP EPS. While conforming with the SEC's guidance from last year we provide estimates of non-GAAP pretax income, estimates of expected cash taxes and estimates of non-GAAP diluted weighted average shares outstanding.

For the full year in 2017 we expect revenues of $800 million to $835 million and non-GAAP pretax income of $200 million to $225 million. We expect to have cash taxes of $23 million to $24 million. Finally we expect to have approximately 122 million shares outstanding on average for 2017.

Our expectations at midpoint include approximately $30 million of low to negative margin hardware revenues. This is a departure from legacy TiVo's practice of guiding without including hardware revenue estimates. Additionally, none of our estimates reflect any IP licensing revenue from Comcast. In terms of timing, we again expect to be slightly backend loaded and suggest modeling 2017 revenues timing as approximately 46% in the first half and approximately 54% in the second half of the year.

In terms of revenue visibility, we have high visibility in the 2017 revenues due to the large percentage of our revenues under contract or considered to be high probability renewals. As discussed earlier, thanks to long-term agreements with many major pay-TV customers, we also have a significant multiyear visibility.

At the midpoint, our 2017 visibility defined as revenues from existing contracts and high probability renewal is approximately 87%. While new revenue expectations of 13% is higher than our legacy expectations, this should not be viewed as taking a greater level of risk with our new revenue expectations. The increase is driven by lower visibility businesses we acquired such as to consumer hardware sales and Cubiware, it is also worth pointing out that once again the upper range of our expectations is aligned with the company's budget.

Looking forward to 2017, it is worth calling out the headwinds we expect when comparing to 2016. This past year benefitted of approximately $45 million in catch-up of one-time revenues, we also expect hardware and ACP sales to continue to decline in 2017.

Finally I will remind everyone that Q1 2016 benefitted approximately $12 million of Comcast advertising and TV everywhere IP license revenues. Combined these factors are approximately $75 million of revenue headwinds in 2017. We also face a hard sequential comparison in Q1 2017 as this past quarter benefited from catch-up revenues on several deals. Additionally, as in prior years we expect higher legal spending in Q1. This is important to our numbers as folks model out spend in margins for the year.

Speaking of cost, we expect to exit 2017 with annualized Q4 non-GAAP total COGS and OpEx cost of approximately $540 million. This is approximately $70 million less than the comparable Q4 2016 annualized cost. We also anticipate that by the time we provide our 2018 expectations will have a non-GAAP operating income margin in the high 30s. We will report each quarter our progress against these two metrics.

Moving on to capital allocation. As Tom mentioned, TiVo plans to initiate an $0.18 per share quarterly dividend with the first dividend payable on March 15, 2017 to stockholders of record on March 1, 2017. In addition, to facilitate opportunistic stock repurchases, the Board increased the Company's repurchase authorization to $150 million. We expect to continue to generate substantial cash flow from operations to remain focused on deploying our capital, to maximize value for our stockholders, while protecting our valuable NOLs.

In that regards, we strongly encourage investors and potential investors to review the presentation on our IR homepage discussing Section 382 transfer restrictions in our chart. These restrictions placed certain limit on equity ownership in order to protect over $1 billion in NOLs. We would be happy to discuss these restrictions if there are any questions.

Now back to Tom.

Tom Carson

Thank you, Peter.

2016 was both a transformational and exciting year for both our product and IP businesses. Our product business as a result of the acquisition those to market was best-in-class products for all types of pay-TV consumers worldwide. Our products cover all major geographies and address all major platforms from traditional set-top boxes to over-the-top experiences, to hybrid solutions in the middle.

We offer our clients end-to-end entertainment discovery platform solutions, as well as critical individual software and services like metadata, search and recommendation services, conversational search technologies, advertising and analytics products. International expansion will be a priority for TiVo. In emerging markets like India and Africa we expect CuBi TV to be deployed on low-cost set-top boxes.

Innovation is a core value for our company as such we will also offer flexible set-top box software which can enable a range of solutions from a single low-cost standalone set-top box to a client powering a DVR solution to a full hall home multi screen platform.

The high ARPU consumers, the next generation TiVo user experience is designed for advanced gateways to deliver a rich graphical home experience. As I mentioned earlier, we look forward to our first deployment early in 2017.

In terms of software and services, we provide data products for service providers, advertisers and broadcasters including metadata and audience insight products covering every major North American [DNA] [ph] based on household viewing data from our advanced television experiences. We also offer advanced search and recommendation solution to enhance user experience for service providers who choose to build their own guide solutions or license others products.

During 2017 our product business will focus on harmonizing the legacy TiVo and Rovi product lines and integrating our leading natural language interface into our advanced search and recommendation solution. We will also focus on transition of existing legacy Rovi guide customers to the richer and more robust, as well as higher ARPU TiVo user experience.

Additional near and long-term product growth drivers include, selling our products more aggressively internationally. Driving metadata sales in traditional and adjacent markets in the U.S. and in Europe, while continuing expansion in Asia and Latin America. Expanding our advanced search and recommendation products, penetration of existing North American and international MSO application, and integrating our natural language software to deliver personalized conversations services and capitalizing on our unique position with our user experience data and metrics to provide advanced analytics products and actionable viewing data.

Turning to IP. Our IP business is based on a record of continuing innovation and investments that has produced two significant worldwide portfolios of patent and patent applications. Our IP is widely recognized in North American pay-TV. We are seeing increasing traction in the fast-growing mobile and over-the-top spaces. We also have significant opportunities to license international pay-TV providers and Chinese CE manufacturers.

We now have every major U.S. pay-TV provider except Comcast under licensed. While as Peter mentioned not in our revenue expectations for 2017, we continue to work on getting Comcast under license even if it requires seeing the pending litigation through the conclusion. The hearing in our ITC case was completed in December and we expect an initial determination in late April of this year. We anticipate the Markman hearing of our case in the Southern District of New York will be in July of this year. While we would prefer a commercial agreement and remain open to discussions on that front, we are prepared to continue enforcing our rights through litigation.

In addition to Comcast, areas our licensed team is focused on for growth include utilizing the TiVo patents to grow our mobile licensing footprint, further penetration in traditional pay-TV markets internationally, continued expansion in over-the-top with Rovi patent, TiVo patent and our relationship with intellectual ventures, and reestablishing our licensing position with newer entrants in the consumer electronics space including Chinese manufacturers.

As always costs remains a focus. As Peter mentioned, we expect continued improvement in profitability as our synergy actions take effect throughout the year. Longer term we expect additional cost improvements and revenue growth in 2018 as we penetrate new licensing opportunities, go-to-market with our integrated best-of-breed solutions, and achieve the remainder of our target synergies.

As I said earlier, I am excited about our position as the new TiVo. We have the products, intellectual property and talent to further our position as a leading global independent entertainment discovery technology provider.

Now we will open up the call to questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Mike Olson with Piper Jaffray. Your line is open.

Mike Olson

Thanks. Good afternoon. Had a couple of questions. First since you are not able to specifically report provide guidance on an non-GAAP EPS, I was wondering if you could confirm that the numbers you did provide imply about $0.69 of non-GAAP EPS in Q4 and 2017 guidance of a $1.45 to $1.65 is that generally correct?

Tom Carson

That is how the math should work.

Mike Olson

Okay. And then secondly, with Samsung signed obviously that was a big deal in the year, what's the potential opportunity with Apple or others for a similar deal. In other words are there other handset makers similarly using the same technology as Samsung are now?

Tom Carson

That's great question. I'll let Samir answer that.

Samir Armaly

Yes, we certainly were excited about the Samsung deal, it was an important one for the company and we do believe it creates an opportunity for us to grow our licensing business in that space. So all of the other handset manufacturers we believe are opportunities for us. As you know, Rovi historically had an agreement with Apple on certain products, but we're excited about the opportunity to expand the relationship with the overall portfolio.

Mike Olson

All right. Thanks very much.

Operator

Your next question comes from Sterling Auty with JPMorgan. Your line is open.

Ugam Kamat

Hi, this is Ugam Kamat on for Sterling Auty. Just on the cost synergy part, can you give us an update on the current run rate cost synergies that you achieved with the TiVo acquisition. I think we talked about somewhere around $40 million in the run rate synergies exiting up FY 2016?

Peter Halt

Correct, we gave you kind of the math to look at the inherited cost and the numbers coming out. Keep in mind we're looking to remove $100 million plus with 65% of the run rate eliminated within one year of the acquisition or by September. We are making great progress, a little bit ahead of plan and really the best thing I can say is and Tom can echo this, we haven't had any surprises. It's not there is not a lot of hard there always is hard working combing two companies. But we had a great understanding of the business from both sides of the company and things are moving along according to plan.

Tom Carson

That's exactly right. I think we feel very comfortable with the synergies that we talked about. We did make very good progress in 2016 and we'll continue that through 2017. And as we noted we certainly expect over the course of the year that the margins will improve, so feeling good about the synergy part of the acquisition for sure.

Peter Halt

And then as pointed out in the prepared remarks, Q1 margin will be down don't forget Q4 benefited from the Samsung deal, additionally Q1 is traditionally quarter we have a little more cost than other quarters. So keep that in mind but do anticipate sequential improvement in terms of cost reduction and margin increase throughout the year as you see the benefits of the synergy flow through.

Ugam Kamat

Perfect. That was really helpful. And secondly, I just wanted to touch upon the economic structure of the new OTT relationship. Are they build upon a per subscriber pricing model or is there is a particular general range of fixed pricing that you are willing to share with us?

Tom Carson

So I think the OTT space has a lot of different components. So you got on one end services that are very similar to the traditional pay-TV services like Sling TV or DirecTV now and obviously those have a similar relationship to what we get on the traditional pay-TV side. Then the rest of the business is you've got various business models with subscription video-on-demand, EST purchases and the like. And so we've had to come up with different pricing models for all of those different situations so that we can find the right deal with the customers.

So, I think you'll see a range of economic business models we have with the OTT providers. Some of the deals we've done early we're very excited about, but we also believe that the opportunity is significant in front of us.

Ugam Kamat

Perfect. Thank you so much.

Operator

Your next question comes from Rob Stone with Cowen and Company. Your line is open.

Rob Stone

Hi, guys. I had a couple of questions about the outlook for 2017. You gave the total revenue and the first half, second half waiting. Can you comment Peter on what factors might drive you towards the low end or the high-end of the range?

Peter Halt

As in any year Rob there are two things that impact us most in terms of where we end up in revenue are the new revenues particularly ones in the IP category when they come in. And then of course on the product side when you see these products being deployed in terms of the license ranges we had.

As commented our visibility isn't quite as high as it has been historically, but don't take that as being more aggressive in the business like our consumer, hardware sales we feel pretty good about the estimates, but it's clearly not something that we have contracted visibility for.

Rob Stone

So my follow-up question is about hardware, I further heard you say that you expect hardware revenues to decline but you're guiding for something like $30 million if I heard that correctly. And I'm wondering if you can provide any more color on how you see that flowing seasonally since I would think it's the type of business that's traditionally more weighted towards the holidays?

Tom Carson

On the consumer side definitely we waited little more towards the holidays. If you look at the results for Q4 you'll see we did about $17.5 million of hardware revenues in the quarter, approximately 10 of that came from the MSO business, so the remainder was consumer. If you think about the midpoint of our guidance we've about $30 million and hardware was about two-thirds of that consumer.

Rob Stone

Okay. And finally you mentioned refinancing debt, you gave a guide for the total of cost of goods and operating expenses. Just as a comment I think it'd be more helpful to separate cost of goods from OpEx and the hardware is going to contain a lot of cost of goods and moves around a lot. But my related question is on income and other expense now that you improve the balance sheet some, can you give us a sense of how to think about the run rate there other income expense? Thanks.

Peter Halt

Yes. If you look at it and if you look at the guidance we gave people in terms of income before taxes, you've got our - basically our revenue Rob, you've got our cost which is COGS plus OpEx, And certainly what fills in the difference between that income before taxes would be kind of our other income and expenses. So at the midpoint of guidance is about $36 million, you can back into that number with the math.

Rob Stone

Great, thanks very much.

Operator

Your next question comes from Eric Wold with B. Riley. Your line is open.

Eric Wold

Thank you and good afternoon. Follow-up question on the guidance, I want to make sure I understand this correctly. As I look at the midpoint of the $30 million in hardware revenue, correct me if I'm wrong, before we talked about guidance you excluded hardware especially if we go back to last March when like our pro forma 2016 number when we first talked about the TiVo Rovi merger. If we take that out apples-to-apples and put to 2017 revenue guidance below $800 million to just about $800 million, maybe and the pro forma last year was before the DISH renewal, so maybe just talk about what's changed in terms of the revenue outlook from last March to now, kind of our apples-to- apples X hardware revenues basis?

Tom Carson

So last year - and keep in the mind that we were combining the guidance and legacy TiVo which always excluded hardware had they included in there then approximately $45 million at the midpoint. So keep that in mind when you think about you our guidance this year versus there's a meaningful decline in hardware.

In terms of differences year-on-year, clearly we didn't have DISH in, but we'll use DISH as an area of focus in our IP licensing efforts. And that became a deal as we got close for most of our time and effort went. And then we had a large amount of time and effort put into the Samsung deal.

So we have a lot of deals that we are working on last year that carryover to 2017 are part of our active pipeline for the IP licensing business.

Eric Wold

I told you - I might have misstated the question a little bit, I'm thinking back to when the $800 million pro forma number is given last March that was before DISH and now we are talking about apples-to-apples $800 million number for this year after DISH. I'm just wondering, was there a deterioration in the core business ex DISH or that's what I'm trying to connect the dots there?

Tom Carson

I got your question Eric and let me try and see if I can be a little clear in my answer. We clearly had new revenues on the IP front and the pro forma $800 million as we got closer and closer to a deal with DISH, it being a very complex deal, that's where a large amount of our time and effort on the IP licensing front went to.

And then in Q4 after the close of the TiVo deal, we put a lot of our focus into the Samsung deal, a very meaningful deal. We've got a great return for that deal. What that meant is that deals that we had in our pipeline that we had planned to close for last year were put on hold and their part of the pipeline we're working on for this year.

Eric Wold

Got it. Okay, that makes sense. And then you look at the pipelines how is that going to morphed with the Rovi, TiVo combination. I mean things that maybe in the pipeline previously as Rovi only now when you include in the TiVo IP in there, does that pipeline - as basically that pipeline change maybe you're willing to take little bit longer time to get a bigger deal structure with both sides of the IP in there?

Samir Armaly

Sure. This is Samir. I think that's right. I mean we obviously feel like the combination of the two portfolios gives us a number of things to talk with potential customers about. I think we've mentioned obviously as Peter was talking about one of the big deals we did in Q4 with Samsung and we talked about it was one of the first revenue synergies of the combined company, where we were able to look at portfolios from legacy Rovi and portfolios from legacy TiVo and put together the right combined deal that made sense for that customer.

And we certainly see those are opportunities in front of us not only in the mobile space similar to what we did with Samsung but with a number of our customers in other areas. So we do believe the opportunity is significant for us and the combination of the two portfolios is something we're excited about talking to people.

Tom Carson

I'd say too Eric just little color commentary means myself and Pete and Samir have met with a lot of people in the last - customers in the last six months whether there are perspectives, intellectual property licensees or product customers and one thing I'll tell you is that, it actually has reaffirmed everything that I thought about merging these two companies. The dynamic on both the product and IP side have in these two companies together has changed in a very positive way in my mind. On the IP side we have a much more robust intellectual property portfolio with the legacy Rovi and with what we have as TiVo intellectual property.

And patents are different enough where we're able to do things maybe more constructive lane areas like mobile. On the product side it's very similar, we have product now that works in a global market and all the major markets around the world on just about every platform. So I would say the combination has really elevated the discussion and has made us much more meaningful in both the product and the IP side of the business.

Eric Wold

And then one last question if I may, continuing on that so as the large service provider of international is going to deploy in early 2017. Well that something that was legacy Rovi discussed in their accelerated once TiVo got in the mix or vice versa. And then is that something that upon deployment it's immediate benefit to revenues going to all end or to make ramp with a deployment schedule? Thank you very much.

Tom Carson

Sure.

Pete Thompson

Yes, this is Pete Thompson. That was an existing TiVo legacy or TiVo customer, so it's on the existing plan that was there. And the ramp up was expected in the budget and the forecast that we had.

Eric Wold

Got it. Thank you, guys.

Operator

There are no further questions. I'll now turn the call over to President and CEO, Tom Carson.

Tom Carson

Thank you very much. We appreciate everybody taking the time to join us. Again I feel great about the way the quarter ended. It was very good year for us as a company financially. We beat all of our internal objectives and frankly the expectations that were set externally for us. And I think it was really a very transformative year with the number of major deals that were done and particularly with the merger of TiVo and Rovi.

So I feel very bullish about where the company is going. In my prepared remarks I talked a little bit about where we're going to be driving on the IP side and on the product side. And there are just a number of significant revenue drivers that we're going to be paying attention to as a company really try to fuel the growth of the company in the next couple of years.

So look forward to talking to everybody after this call and on some road shows coming up in the not-too-distant future. So, thank you very much everybody.

Operator

This concludes today's conference call. You may now disconnect.

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