TiVo Adds Record MSO Subs in Q3

Adds 295,000 Subs From Pay-TV Partnerships, But Sheds 21,000 TiVo-Owned Subs

TiVo added about 295,000 subscribers from its pay-TV partnerships in the third quarter, a record in the category that helped it boost its total sub base to 3.9 million, a 32% year-over-year increase.

The MSO additions were a 25% improvement compared to second quarter growth. Although TiVo has been leaning on growth from U.K.-based  Virgin Media, it said about 80% of the increase in quarter-over-quarter net adds, of close to 60,000, was driven by MSO providers other than Virgin. ONO of Spain has been another significant contributor to TiVo’s subscriber base.

Overall, the MSOs that are engaged with TiVo cover about 10 million subscribers, and TiVo is about 25% penetrated there, company  president and CEO Tom Rogers said on Tuesday’s earnings call.

TiVo, which introduced its new line of retail-pointing “Roamio” DVRs in August, lost 21,000 net TiVo-owned subscriptions in the quarter, widened from a loss of 15,000 TiVo-owned customers in the year-ago period. Speaking on Tuesday's earnings call, TiVo CFO Naveen Chopra said the wider TiVo-owned loss was brought on it part by a "nonrecurring churn event" that affecting about 12,000 subs that were part of a unique legacy deal with Healthcast. "Excluding the impact of this onetime event, our TiVo-owned churn rate would have been consistent with the prior several quarters," he said.

TiVo ended the period with 960,000 TiVo-owned subs, and 2.93 million through its MSO deals.

On the financial front, TiVo posted net income of $12.5 million (10 cents per share) on revenues of $117.3 million for the period ended October 31.

Net income was above the guided range of $6 million to $8 million, but well off year-ago net income of $59 million that included proceeds of $78.4 million related to TiVo’s settlement with Verizon Communications.

Looking ahead, TiVo expects fourth quarter revenues in the range of $83 million to $85 million, net income of $2 million to $5 million, and an adjusted EBITDA of $16 million to $19 million. The anticipated adjusted EBITDA includes $4 million to $5 million if incremental seasonal spend versus the prior quarter and an expected decline in hardware margin as MSO partners begin to deploy TiVo on third-party hardware, the company said.