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TiVo Reports Results for the Third Quarter Ended October 31,

TiVo Reports Results for the Third Quarter Ended October 31, 2012 
SAN JOSE, CA -- (Marketwire) -- 11/28/12 --  TiVo Inc. (NASDAQ: TIVO) 


 
--  Service & Technology revenue up 18% year-over-year to $61.0
    million
--  Adjusted EBITDA was $71.9 million and Net Income was $59.0 million;
    both exceeding guidance
--  TiVo expects Adjusted EBITDA profitability next quarter, excluding
    litigation expense
--  TiVo's subscription base increased 44% year-over-year to almost three
    million subscriptions
--  MSO service revenue grew 84% year-over-year
--  $250 million Verizon settlement once again proves strength of TiVo's
    intellectual property; Total consideration and damages from
    intellectual property actions now more than $1 billion
--  Recent deals with Mediacom, Midcontinent, and Cable ONE highlight
    TiVo's leadership amongst U.S. mid-sized operators and continued
    distribution momentum
--  ONO and Suddenlink deliver strongest quarter of TiVo subscription net
    additions to date
--  Comcast expands TiVo XFINITY(R) ON Demand offering to 12 markets

  
TiVo Inc. (NASDAQ: TIVO), a leader in the advanced television
entertainment market, today reported financial results for the third
quarter ended October 31, 2012. 
Tom Rogers, President and CEO of TiVo, said, "This was another strong
quarter for TiVo marked by meaningful execution across all areas of
our business. We delivered solid revenue growth and our Adjusted
EBITDA and net income exceeded our guidance even when excluding the
significant positive impact of our litigation settlement with
Verizon. We also signed new operator partnerships and continued to
build our data analytics business. As a result of the progress we
have made toward our operational goals, we expect to be profitable
next quarter on an Adjusted EBITDA basis excluding litigation spend. 
"During the third quarter, overall subscriptions increased 44%
year-over-year as our deals with pay-TV operators brought TiVo to
more and more homes and our MSO service revenue grew 84% in the third
quarter as compared to the year-ago quarter, significantly more than
the second quarter year-over-year growth rate of 22%. We continued to
sign on new operator partners as Mediacom, Midcontinent, and Cable
ONE turned t
o TiVo for their advanced television offerings, securing
our leadership position amongst mid-sized operators and setting the
stage for continued growth in our MSO business. Finally, the value of
our intellectual property was once again highlighted by another
favorable patent settlement, this time with Verizon, bringing the
total consideration from the enforcement of our intellectual property
to more than $1 billion from three litigations, and we believe
further bolstering our position with respect to our ongoing
intellectual property enforcement actions." 
For the third quarter, service and technology revenues increased 18%
to $61.0 million. This compared to guidance of $57 million to $59
million and $51.8 million for the same quarter last year. TiVo
reported net income of $59.0 million, compared to guidance of a net
loss of $(27) million to $(29) million, and a net loss of $(24.5)
million in the same quarter last year. Adjusted EBITDA was $71.9
million, compared to Adjusted EBITDA guidance of a loss of $(14)
million to $(16) million, and to an Adjusted EBITDA loss of $(13.9)
million in the same quarter last year. Included in this quarter's
results were $2.4 million of ongoing licensing revenue and $78.4
million of litigation proceeds relating to past damages from the
Verizon settlement. 
Rogers continued, "This quarter we signed three new operator
partnerships. The first is with Mediacom Communications, the
eighth-largest cable operator in the U.S., which has chosen TiVo to
deliver its next-generation, whole-home television experience to
subscribers across its footprint. Additionally, Midcontinent
Communications, a provider to approximately 300,000 customers,
selected TiVo for its advanced television services. Finally, we
announced a deal with Cable ONE, the 10th largest cable operator in
the U.S. For Cable ONE, given its past experiences, it was critical
for them to select a partner with a proven track record of execution.
With these deals in place, we currently have relationships with 10 of
the top 25 operators in the U.S.  
"These deals increase the potential for TiVo to reach more homes and
to drive further meaningful financial upside as we expect our
existing R&D investment will be heavily leveraged, making it possible
to implement a TiVo offering quickly with minimal incremental
development cost. Additionally, these deployments are expected to
utilize a six-tuner gateway set-top box that we are currently
developing with Pace, which is expected to further reduce costs for
operators. 
"In terms of our existing deployments, we are continuing to see
impressive subscription growth. In fact, several of our partners
beyond Virgin Media have achieved a double-digit percentage TiVo
penetration of their subscriber base as our product has become a key
differentiator for their offering, which in addition to helping
bolster customer acquisition is reducing churn rates and improving
revenue per subscriber. 
"In the U.K., Virgin Media continues to improve its pay television
net additions, which are accelerating while its primary competitor is
experiencing decelerating net additions. TiVo is now being enjoyed by
more than one million Virgin Media subscribers, representing 30% of
their base. Further, we recently announced Virgin Media is extending
the TiVo experience beyond the set-top box by delivering video
through an IP network from the cloud to a variety of devices. Virgin
Media has recently introduced an app for iOS devices and a web portal
that will give subscribers access to live program viewing, thousands
of hours of on-demand content on tablets, smartphones, and computers,
plus the ability to remotely manage their TiVo service. 
"In Spain, despite a challenging economic environment, ONO had its
best quarter of TiVo subscription growth to date, almost doubling its
TiVo subscription base for the third straight quarter.  
"In Scandinavia, we remain on track to launch our first IPTV
implementation with Com Hem next year, which will allow Com Hem to
offer TiVo both in its traditional form and directly from the cloud
to connected devices without the need for a set-top box. We believe
this cloud implementation will further increase the appeal of TiVo to
pay-TV operators across the globe and will allow these operators to
offer a superior television experience without the need to incur
significant capex from set-top box purchases. 
"In the U.S., our efforts with small and mid-sized cable operators
continued to yield strong results as we delivered our strongest
aggregate net subscription additions to date. With the announced
launch of our non-DVR IP set-top box, TiVo Mini, that will create a
whole home thin-client experience for our operators and TiVo Stream,
which allows customers to stream as well as download content from
their DVRs to their iPads and iPhones, as well as other planned
products next year, we believe that we are well positioned to drive
similar results across all of our domestic partnerships. 
"On the TiVo-Owned front, we posted our best net subscription
performance in almost four years and our lowest absolute churn rate
in approximately six years. This quarter we also saw an increased
percentage of sales of non-subsidized, higher end devices with larger
hard drives and m
ore tuners, which have significantly lower
associated subscription acquisition costs. Looking ahead, we are
planning on reallocating the subsidy dollars gained from this
hardware mix shift to marketing programs which we believe will allow
us to gain subscription additions while not significantly increasing
acquisition costs from the levels we've seen over the last year. 
"In addition, our Comcast TiVo offering continues to be well received
and has been expanded from two to twelve markets. We've also expanded
our retail distribution to Wal-Mart, the largest domestic retailer,
which provides opportunity to drive incremental sales. With lower
churn, better messaging, a mix shift to higher-end products, more
distribution, as well as continued product innovation; we believe the
prospects to drive stronger financial results for this business are
as good as they've been in some time. 
"Our efforts to take the TiVo experience beyond the living room took
a significant step forward this quarter with the launch of our TiVo
Stream offering. Early sales results in retail have been well above
our forecasts and our MSO partners are excited to distribute the
product, which has received significant accolades from media
reviewers as well as our end-user customers.  
"We also continue to build our data analytics business, with a focus
on growing new revenue-enhancing opportunities and bolstering our
ability to provide unique insights to an industry increasingly
seeking alternative ways to measure audience behavior. We are quickly
integrating the capabilities of TRA, now rebranded TiVo Research and
Analytics (TRA), with our existing measurement services and are
providing brands, advertisers, and networks with invaluable insights
into not only what shows are being most watched, but also insights
and analytics that link television viewing and purchase activity.  
"This quarter our intellectual property was once again validated as
we settled our patent litigation with Verizon for at least $250
million, bringing the total consideration from our intellectual
property enforcement actions to more than $1 billion. We remain
confident that the successes we've had defending our innovation,
positions TiVo favorably in our ongoing enforcement actions, and
believe the settlement with Verizon only further strengthens our
hand."  
Rogers concluded, "We believe this was a quarter marked by
encouraging progress across the board for our business. Many of our
operator deals are in full swing and are bringing the TiVo experience
to hundreds of thousands of new homes. We signed important new
distribution deals and secured a valuable litigation settlement with
Verizon. We also continue to build a strategic position in the
audience research and advertising arena. We believe that these trends
will drive continued improvement of our financial results and support
our plan to be profitable on an Adjusted EBITDA basis, excluding
litigation expenses, in the fourth quarter." 
Management Provides Financial Guidance  
For the fourth quarter of Fiscal 2013, TiVo anticipates service and
technology revenues in the range of $63 million to $65 million. TiVo
anticipates net loss to be in the range of $(15) million to $(17)
million and an Adjusted EBITDA loss to be in the range of $(2)
million to $(4) million, including litigation expense.  
Additionally, TiVo expects to be profitable on an Adjusted EBITDA
basis excluding litigation spend in the fourth quarter of fiscal 2013
and for current operational trends to drive continued Adjusted EBITDA
and net income improvement going forward.  
This financial guidance is based on information available to
management as of November 28, 2012. TiVo expressly disclaims any duty
to update this guidance.  
Management's guidance includes Adjusted EBITDA, a non-GAAP financial
measure as defined in Regulation G. TiVo has provided a
reconciliation of EBITDA and Adjusted EBITDA to net income (loss) in
the attached schedules solely for the purpose of complying with
Regulation G and not as an indication that EBITDA or Adjusted EBITDA
is a substitute measure for net income (loss).  
Conference Call and Webcast  
TiVo will host a conference call and Webcast to discuss the third
quarter financial and operating results and guidance outlook at 2:00
pm PT (5:00 pm ET), today, November 28, 2012. To listen to the
discussion, please visit http://www.tivo.com/ir and click on the link
provided for the Webcast or dial (877) 618-4505 (conference ID number
is 64085149). The Webcast will be archived and available through
December 5, 2012 at http://www.tivo.com/ir or by calling (404)
537-3406; and entering the conference ID number 64085149. 
About TiVo Inc. 
Founded in 1997, TiVo Inc. (NASDAQ: TIVO) developed the first
commercially available digital video recorder (DVR). TiVo offers the
TiVo service and TiVo DVRs directly to consumers online at
www.tivo.com and through third-party retailers. TiVo also distributes
its technology and services through solutions tailored for cable,
satellite, and broadcasting companies. Since its founding, TiVo has
evolved into the ultimate single solution media center by combining
its patented DVR technologies and universal cable box capabilities
with the ability to aggregate, search, and deliver millions of pieces
of broadband, cable, and broadcast content directly to the
television. An economical, one-stop-shop for in-home entertainment,
TiVo's intuitive functionality and ease of use puts viewers in
control by enabling them to effortlessly navigate the best digital
entertainment content available through one box, with one remote, and
one user interface, delivering the most dynamic user experience on
the market today. TiVo also continues to weave itself into the fabric
of the media industry by providing interactive advertising solutions
and audience research and measurement ratings services to the
television industry.  
TiVo and the TiVo Logo are trademarks or registered trademarks of
TiVo Inc. or its subsidiaries worldwide. Copyright 2012 TiVo Inc. All
rights reserved. All other trademarks are the property of their
respective owners. 
This release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements relate to, among other things, TiVo's future business and
growth strategies including future distribution agreements and
subscription growth from MSO customers (both domestically and
internationally) and TiVo's ability to drive better financial
performance from TiVo's retail business, TiVo's future marketing
plans and spend, the future availability of TiVo offering with Com
Hem next year, future revenue opportunities from TRA, future
increases in MSO revenues, future decreases in TiVo R&D spending,
TiVo's ability to leverage and minimize its research and development
in the future between MSO customers and in retail, and the future
strength and value of TiVo's intellectual property portfolio.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as, "believe," "expect," "may,"
"will," "intend," "estimate," "continue," or similar expressions or
the negative of those terms or expressions. Such statements involve
risks and uncertainties, which could cause actual results to vary
materially from those expressed in or indicated by the
forward-lookin
g statements. Factors that may cause actual results to
differ materially include delays in development, competitive service
offerings and lack of market acceptance, as well as the other
potential factors described under "Risk Factors" in the Company's
public reports filed with the Securities and Exchange, including the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 2012, our Quarterly Reports on Form 10-Q for the periods
ended April 30, 2012 and July 31, 2012, and Current Reports on Form
8-K. The Company cautions you not to place undue reliance on
forward-looking statements, which reflect an analysis only and speak
only as of the date hereof. TiVo disclaims any obligation to update
these forward-looking statements. 


 
                                                                            
                                                                            
                                 TIVO INC.                                  
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
             (In thousands, except per share and share amounts)             
                                (unaudited)                                 
                                                                            
                     Three Months Ended October   Nine Months Ended October 
                                 31,                         31,            
                     --------------------------  -------------------------- 
                         2012          2011          2012          2011     
                     ------------  ------------  ------------  ------------ 
Revenues                                                                    
    Service revenues $     35,228  $     32,413  $     98,151  $     99,763 
    Technology                                                              
     revenues              25,727        19,391        71,439        40,480 
    Hardware                                                                
     revenues              21,072        12,970        45,462        31,465 
                     ------------  ------------  ------------  ------------ 
Net revenues               82,027        64,774       215,052       171,708 
Cost of revenues                                                            
    Cost of service                                                         
     revenues              11,238         9,265        28,488        27,154 
    Cost of                                                                 
     technology                                                             
     revenues               5,779         7,721        15,857        18,554 
    Cost of hardware                                                        
     revenues              23,434        16,817        56,336        39,071 
                     ------------  ------------  ------------  ------------ 
  Total cost of                                                             
   revenues                40,451        33,803       100,681        84,779 
                     ------------  ------------  ------------  ------------ 
      Gross margin         41,576        30,971       114,371        86,929 
                     ------------  ------------  ------------  ------------ 
    Research and                                                            
     development           28,277        27,272        88,489        80,542 
    Sales and                                                               
     marketing              7,958         6,753        21,425        19,995 
    Sales and                                                               
     marketing,                                                             
     subscription                                                           
     acquisition                                                            
     costs                  1,560         2,398         5,189         6,072 
    General and                                                             
     administrative        21,772        18,032        63,367        58,310 
    Litigation                                                              
     proceeds             (78,441)            -       (78,441)     (175,716)
                     ------------  ------------  ------------  ------------ 
      Total                                                                 
       operating                                                            
       expenses           (18,874)       54,455       100,029       (10,797)
                     ------------  ------------  ------------  ------------ 
      Income (loss)                                                         
       from                                                                 
       operations          60,450       (23,484)       14,342        97,726 
    Interest income         1,383           759         3,143         4,600 
    Interest expense                                                        
     and other                                                              
     income                                                                 
     (expense), net        (1,958)       (2,015)       (5,906)       (6,604)
                     ------------  ------------  ------------  ------------ 
      Income (loss)                                                         
       before income                                                        
       taxes               59,875       (24,740)       11,579        95,722 
      Benefit from                                                          
       (provision                                                           
       for) income                                                          
       taxes                 (848)          242        (1,067)         (746)
                     ------------  ------------  ------------  ------------ 
    Net income                                                              
     (loss)          $     59,027  $    (24,498) $     10,512  $     94,976 
                     ============  ============  ============  ============ 
                                                                            
    Net income                                                              
     (loss) per                                                             
     common share                                                           
      Basic          $       0.49  $      (0.21) $       0.09  $       0.82 
      Diluted        $       0.44  $      (0.21) $       0.09  $       0.74 
                                                                            
    Income (loss)                                                           
     for purposes of                                                        
     computing net                                                          
     income (loss)                                                          
     per share:                                                             
      Basic                59,027       (24,498)       10,512        94,976 
      Diluted              60,992       (24,498)       10,512        99,989 
                                                                            
    Weighted average                                                        
     common and                                                             
     common                                                                 
     equivalent                                                             
     shares:                                                                
      Basic           119,363,613   117,232,354   119,149,010   116,208,111 
      Diluted         138,587,931   117,232,354   123,353,443   135,722,730 
                                                                            
         
                                                                   
                                                                            
                                                                            
                                 TIVO INC.                                  
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
             (In thousands, except per share and share amounts)             
                                (unaudited)                                 
                                                                            
                                                  October 31,   January 31, 
                                                     2012          2012     
                                                 ------------  ------------ 
                     ASSETS                                                 
CURRENT ASSETS                                                              
  Cash and cash equivalents                      $    177,466  $    169,555 
  Short-term investments                              446,084       449,244 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $396 and $370,                                      
   respectively                                        28,388        24,665 
  Inventories                                          17,380        18,925 
  Deferred cost of technology revenues, current        11,725         4,400 
  Prepaid expenses and other, current                  14,954        12,106 
                                                 ------------  ------------ 
      Total current assets                            695,997       678,895 
LONG-TERM ASSETS                                                            
    Property and equipment, net of accumulated                              
     depreciation of $49,566 and $47,170,                                   
     respectively                                      10,059         9,191 
    Intangible assets and capitalized software,                             
     net of accumulated amortization of $20,059                             
     and $17,797, respectively                         17,350         4,677 
    Deferred cost of technology revenues, long-                             
     term                                              18,435        23,546 
    Goodwill                                           12,281             - 
    Prepaid expenses and other, long-term               3,165         3,501 
                                                 ------------  ------------ 
      Total long-term assets                           61,290        40,915 
                                                 ------------  ------------ 
        Total assets                             $    757,287  $    719,810 
                                                 ============  ============ 
       LIABILITIES AND STOCKHOLDERS'EQUITY                                  
LIABILITIES                                                                 
      CURRENT LIABILITIES                                                   
      Accounts payable                           $     28,565  $     32,102 
      Accrued liabilities                              42,592        45,341 
      Deferred revenue, current                        95,688        74,986 
                                                 ------------  ------------ 
        Total current liabilities                     166,845       152,429 
      LONG-TERM LIABILITIES                                                 
      Deferred revenue, long-term                      81,837        81,336 
      Convertible senior notes                        172,500       172,500 
      Deferred rent and other long-term                                     
       liabilities                                        539           518 
                                                 ------------  ------------ 
        Total long-term liabilities                   254,876       254,354 
                                                 ------------  ------------ 
          Total liabilities                           421,721       406,783 
      COMMITMENTS AND CONTINGENCIES                                         
STOCKHOLDERS' EQUITY                                                        
      Preferred stock, par value $0.001:                                    
       Authorized shares are 10,000,000; Issued                             
       and outstanding shares - none                        -             - 
      Common stock, par value $0.001: Authorized                            
       shares are 275,000,000; Issued shares are                            
       127,662,627 and 123,073,486,                                         
       respectively, and outstanding shares are                             
       123,818,266 and 121,616,908, respectively          128           123 
      Treasury stock, at cost: 3,844,361 shares                             
       and 1,456,578 shares, respectively             (36,915)      (13,788)
      Additional paid-in capital                    1,038,681     1,003,696 
      Accumulated deficit                            (666,552)     (677,064)
      Accumulated other comprehensive income              224            60 
                                                 ------------  ------------ 
          Total stockholders' equity                  335,566       313,027 
                                                 ------------  ------------ 
          Total liabilities and stockholders'                               
           equity                                $    757,287  $    719,810 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                                                            
                                 TIVO INC.                                  
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                               (In thousands)                               
                                (unaudited)                                 
                                                                            
                                                         Nine Months Ended  
                                                            October 31,     
                                                       -------------------- 
                                                          2012       2011   
                                                       ---------  --------- 
CASH FLOWS FROM OPERATING ACTIVITIES                                        
  Net income                                           $  10,512  $  94,976 
  Adjustments to reconcile net income to net cash                           
   provided by operating activities:                                        
    Depreciation and amortization of property and                           
     equipment and intangibles                             6,622      6,682 
    Stock-based compensation expense                      25,163     21,979 
    Amortization of discounts and premiums on                               
     investments                                           4,097      2,483 
    Non-cash loss on over allotment option and non-                         
     cash interest expense                                   721      2,192 
    Utilization and write-down of trade credits                -        619 
    Allowance for doubtful accounts                          196        322 
  Changes in assets and liabilities, net of the                             
   effects 
of the acquisition:                                              
    Accounts receivable                                   (3,124)    (3,311)
    Inventories                                            1,545     (2,271)
    Deferred cost of technology revenues                  (1,916)   (11,088)
    Prepaid expenses and other                            (1,947)      (653)
    Accounts payable                                      (6,377)    11,854 
    Accrued liabilities                                   (3,619)     5,717 
    Deferred revenue                                      20,122     95,988 
    Deferred rent and other long-term liabilities             21        293 
                                                       ---------  --------- 
      Net cash provided by operating activities        $  52,016  $ 225,782 
                                                       ---------  --------- 
CASH FLOWS FROM INVESTING ACTIVITIES                                        
  Purchases of short-term investments                   (429,262)  (640,300)
  Sales or maturities of long-term and short-term                           
   investments                                           427,925    256,990 
  Acquisition of business, net of cash and cash                             
   equivalents acquired                                  (24,481)         - 
  Acquisition of property and equipment                   (4,594)    (4,094)
  Acquisition of capitalized software and intangibles        (95)      (281)
                                                       ---------  --------- 
      Net cash used in investing activities            $ (30,507) $(387,685)
                                                       ---------  --------- 
CASH FLOWS FROM FINANCING ACTIVITIES                                        
  Proceeds from issuance of convertible senior notes,                       
   net of issuance costs of $6,391                             -    166,109 
  Proceeds from issuance of common stock related to                         
   exercise of common stock options                        5,788      9,796 
  Proceeds from issuance of common stock related to                         
   employee stock purchase plan                            3,741      3,284 
  Treasury stock - repurchase of stock                   (23,127)    (4,566)
                                                       ---------  --------- 
      Net cash provided by (used in) financing                              
       activities                                      $ (13,598) $ 174,623 
                                                       ---------  --------- 
NET INCREASE IN CASH AND CASH EQUIVALENTS              $   7,911  $  12,720 
                                                       ---------  --------- 
CASH AND CASH EQUIVALENTS:                                                  
  Balance at beginning of period                         169,555     71,221 
                                                       ---------  --------- 
  Balance at end of period                             $ 177,466  $  83,941 
                                                       =========  ========= 
                                                                            
                                                                            
                                                                            
                                                                            
                                  TIVO INC.                                 
                                 OTHER DATA                                 
                                                                            
                                                                 Guidance   
                                   Three Months Ended         Reconciliation
                                                              --------------
                                                               Three Months 
                                       October 31,                Ending    
                            --------------------------------                
                                                                January 31, 
                                  2012             2011            2013     
                            ---------------  ---------------  --------------
                                     (In thousands)            (In millions)
Net loss                    $        59,027  $       (24,498)  $(15) - $(17)
Add back:                                                                   
  Depreciation &                                                            
   amortization                       2,463            2,189      $3 - $2   
  Interest income & expense             582            1,256        $1      
  Provision for income tax              848             (242)       $0      
                            ---------------  ---------------  --------------
  EBITDA                             62,920          (21,295)  $(11)- $(13) 
  Stock-based compensation            9,018            7,420        $9      
                            ---------------  ---------------  --------------
  Adjusted EBITDA           $        71,938  $       (13,875)   $(2) - $(4) 
  Litigation expenses       $         9,473  $         8,167      $7 - $9   
  Litigation proceeds (past                                                 
   damage awards)           $       (78,441) $            $0        $0      
                            ---------------  ---------------  --------------
  Adjusted EBITDA excluding                                                 
   litigation expense and                                                   
   litigation proceeds                                                      
   (past damage awards)     $         2,970  $        (5,708)     $5 - $7   
                            ===============  ===============  ==============

 
EBITDA and Adjusted EBITDA Results. TiVo's "EBITDA" means income
before interest income and expense, provision for income taxes and
depreciation and amortization. TiVo's "Adjusted EBITDA" is EBITDA
less expense for stock-based compensation. EBITDA and Adjusted EBITDA
are not measures of financial performance under generally accepted
accounting principles, which we refer to as GAAP. We have presented
EBITDA and Adjusted EBITDA solely as supplemental disclosure because
we believe they allow for a more complete analysis of our results of
operations and we believe that EBITDA and Adjusted EBITDA are useful
to investors because EBITDA and Adjusted EBITDA are commonly used to
analyze companies on the basis of operating performance. In addition,
because of the variety of equity awards used by companies, the
varying methodologies for determining stock-based compensation
expense, and the subjective assumptions involved in those
determinations, we believe excluding stock-based compensation
enhances the ability of management and investors to evaluate our
operating performance over multiple periods. Management does not use
EBITDA or Adjusted EBITDA as a measure of liquidity because, among
other things, they do not exclude the impact of deferred revenues
associated with the amortization of product lifetime subscriptions.
We do not use stock-based compensation expense in our internal
measures. A limitation associated with these non-GAAP measures is
that they do not include any stock-based compensation expense related
to hiring, retaining, and incentivizing the Company's workforce.
EBITDA and Adjusted EBITDA are not intended to represent, and should
not be considered more meaningful than, or as an alternative to,
measures of operating performance as determined in accordance with
GAAP.  


 
                                         
                                   
                                                                            
                                 TIVO INC.                                  
                                 OTHER DATA                                 
                                                                            
Subscriptions                                Three Months Ended October 31, 
-------------------------------------------- ------------------------------ 
        (Subscriptions in thousands)              2012            2011      
-------------------------------------------- --------------  -------------- 
TiVo-Owned Subscription Gross Additions:                 30              30 
Subscription Net Additions/(Losses):                                        
TiVo-Owned                                              (15)            (30)
MSOs                                                    240             147 
                                             --------------  -------------- 
  Total Subscription Net Additions/(Losses)             225             117 
Cumulative Subscriptions:                                                   
TiVo-Owned                                            1,042           1,135 
MSOs                                                  1,898             910 
                                             --------------  -------------- 
  Total Cumulative Subscriptions                      2,940           2,045 
% of TiVo-Owned Cumulative Subscriptions                                    
 paying recurring fees                                   54%             56%

 
Included in the 1,042,000 TiVo-Owned subscriptions are approximately
208,000 lifetime subscriptions that have reached the end of the
period TiVo uses to recognize lifetime subscription revenue. These
lifetime subscriptions no longer generate subscription revenue. 
Subscriptions. Management reviews this metric, and believes it may be
useful to investors, in order to evaluate our relative position in
the marketplace and to forecast future potential service revenues.
Above is a table that details the change in our subscription base
during the last three months ended October 31, 2012 and October 31,
2011. The TiVo-Owned lines refer to subscriptions sold directly or
indirectly by TiVo to consumers who have TiVo-enabled DVRs and for
which TiVo incurs acquisition costs. The MSO lines refer to
subscriptions sold to consumers by MSOs such as DIRECTV, Virgin
Media, Cableuropa S.A.U. ("ONO"), RCN, Grande, and Suddenlink, among
others, and for which TiVo expects to incur little or no acquisition
costs. Additionally, we provide a breakdown of the percent of
TiVo-Owned subscriptions for which consumers pay recurring fees as
opposed to a one-time prepaid product lifetime fee.  
We define a "subscription" as a contract referencing a TiVo-enabled
DVR for which (i) a consumer has committed to pay for the TiVo
service and (ii) service is not canceled. We count product lifetime
subscriptions in our subscription base until both of the following
conditions are met: (i) the period we use to recognize product
lifetime subscription revenues ends; and (ii) the related DVR has not
made contact to the TiVo service within the prior six month period.
Product lifetime subscriptions past this period which have not called
into the TiVo service for six months are not counted in this total.
Prior to November 1, 2011 we amortized all product lifetime
subscriptions over a 60 month period. Effective November 1, 2011, we
have extended the period we use to recognize product lifetime
subscription revenues from 60 months to 66 months for product
lifetime subscriptions where we have not recognized all of the
related deferred revenue as of the reassessment date. We are not
aware of any uniform standards for defining subscriptions and caution
that our presentation may not be consistent with that of other
companies. Additionally, the subscription fees that our MSOs pay us
are typically based upon a specific contractual definition of a
subscriber or subscription which may not be consistent with how we
define a subscription for our reporting purposes nor be
representative of how such subscription fees are calculated and paid
to us by our MSOs. Our MSOs subscription data is based in part on
reporting from our third-party MSO partners. 


 
                                                                            
                                 TIVO INC.                                  
                     OTHER DATA - KEY BUSINESS METRICS                      
                                                                            
                                      Three Months Ended October 31,        
                               -------------------------------------------  
TiVo-Owned Churn Rate                  2012                   2011          
                               --------------------   --------------------  
                               (In thousands, except churn rate per month)  
Average TiVo-Owned                                                          
 subscriptions                                1,050                  1,149  
TiVo-Owned subscription                                                     
 cancellations                                  (45)                   (60) 
                               --------------------   --------------------  
     TiVo-Owned Churn Rate per                                              
                         month                 (1.4)%                 (1.7)%
                               --------------------   --------------------  

 
TiVo-Owned Churn Rate per Month. Management reviews this metric, and
believes it may be useful to investors, in order to evaluate our
ability to retain existing TiVo-Owned subscriptions (including both
monthly and product lifetime subscriptions) by providing services
that are competitive in the market. Management believes factors such
as service enhancements, service commitments, higher customer
satisfaction, and improved customer support may improve this metric.
Conversely, management believes factors such as increased
competition, lack of competitive service features such as high
definition television recording capabilities in our older model DVRs
or access to certain digital television channels or MSO Video On
Demand services, as well as increased price sensitivity and
installation and CableCARD(TM) technology limitations, may cause our
TiVo-Owned Churn Rate per month to increase. 
We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned
subscription cancellations in the period divided by the Average
TiVo-Owned subscriptions for the period (including both monthly and
product lifetime subscriptions), which then is divided by the number
of months in the period. We calculate Average TiVo-Owned
subscriptions for the period by adding the average TiVo-Owned
subscriptions for each month and dividing by the number of months in
the period. We calculate the average TiVo-Owned subscriptions for
each month by adding the beginning and ending subscriptions for the
month and dividing by two. We are not aware of any uniform standards
for calculating churn and caution that our presentation may not be
consistent with that of other companies. 


 
                                                                            
                                  Three Months Ended    Twelve Months Ended 
                                      October 31,           October 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Subscription Acquisition Costs           (In thousands, except S
AC)         
Sales and marketing,                                                        
 subscription acquisition costs  $   1,560  $   2,398  $   6,509  $   8,286 
Hardware revenues                  (21,072)   (12,970)   (61,890)   (45,901)
Less: MSOs'-related hardware                                                
 revenues                           13,051      8,998     40,656     24,273 
Cost of hardware revenues           23,434     16,817     76,704     63,773 
Less: MSOs'-related cost of                                                 
 hardware revenues                 (11,841)    (6,351)   (36,811)   (17,463)
                                 ---------  ---------  ---------  --------- 
  Total Acquisition Costs            5,132      8,892     25,168     32,968 
                                 =========  =========  =========  ========= 
  TiVo-Owned Subscription Gross                                             
   Additions                            30         30        114        142 
  Subscription Acquisition Costs                                            
   (SAC)                         $     171  $     296  $     221  $     232 
                                 =========  =========  =========  ========= 

 
Subscription Acquisition Cost or SAC. Management reviews this metric,
and believes it may be useful to investors, in order to evaluate
trends in the efficiency of our marketing programs and subscription
acquisition strategies. We define SAC as our total TiVo-Owned
acquisition costs for a given period divided by TiVo-Owned
subscription gross additions for the same period. We define total
acquisition costs as sales and marketing, subscription acquisition
costs less net TiVo-Owned related hardware revenues (defined as
TiVo-Owned related gross hardware revenues less rebates, revenue
share and market development funds paid to retailers) plus TiVo-Owned
related cost of hardware revenues. The sales and marketing,
subscription acquisition costs line item includes advertising
expenses and promotion-related expenses directly related to
subscription acquisition activities, but does not include expenses
related to advertising sales. We do not include third-parties'
subscription gross additions, such as MSOs' gross additions with TiVo
subscriptions, in our calculation of SAC because we typically incur
limited or no acquisition costs for these new subscriptions, and so
we also do not include MSOs' sales and marketing, subscription
acquisition costs, hardware revenues, or cost of hardware revenues in
our calculation of TiVo-Owned SAC. We are not aware of any uniform
standards for calculating total acquisition costs or SAC and caution
that our presentation may not be consistent with that of other
companies. 


 
                                                                            
                                                                            
                                             Three Months Ended October 31, 
                                             ------------------------------ 
TiVo-Owned Average Revenue per Subscription       2012            2011      
                                             --------------  -------------- 
                                               (In thousands, except ARPU)  
Total Service revenues                       $       35,228  $       32,413 
Less: MSOs'-related service revenues                 (7,526)         (4,087)
                                             --------------  -------------- 
TiVo-Owned-related service revenues                  27,702          28,326 
Average TiVo-Owned revenues per month                 9,234           9,442 
Average TiVo-Owned subscriptions per month            1,050           1,149 
                                             --------------  -------------- 
TiVo-Owned ARPU per month                    $         8.79  $         8.22 
                                             ==============  ============== 
                                                                            
                                                                            
                                                                            
                                             Three Months Ended October 31, 
                                             ------------------------------ 
MSOs' Average Revenue per Subscription            2012            2011      
                                             --------------  -------------- 
                                               (In thousands, except ARPU)  
Total Service revenues                       $       35,228  $       32,413 
Less: TiVo-Owned-related service revenues           (27,702)        (28,326)
                                             --------------  -------------- 
MSOs'-related service revenues                        7,526           4,087 
Average MSOs' revenues per month                      2,509           1,362 
Average MSOs' subscriptions per month                 1,771             828 
                                             --------------  -------------- 
MSOs' ARPU per month                         $         1.42  $         1.65 
                                             ==============  ============== 

 
Average Revenue Per Subscription or ARPU. Management reviews this
metric, and believes it may be useful to investors, in order to
evaluate the potential of our subscription base to generate revenues
from a variety of sources, including service fees, advertising, and
audience research measurement. You should not use ARPU as a
substitute for measures of financial performance calculated in
accordance with GAAP. Management believes it is useful to consider
this metric excluding the costs associated with rebates, revenue
share, and other payments to channel because of the discretionary and
varying nature of these expenses and because management believes
these expenses, which are included in hardware revenues, net, are
more appropriately monitored as part of SAC. We are not aware of any
uniform standards for calculating ARPU and caution that our
presentation may not be consistent with that of other companies.
Further, the inclusion of advertising and audience research
measurement revenues in our service revenues has the effect of
increasing ARPU above the amounts that are directly attributable to
TiVo service subscription fees. With the acquisition of TRA in July
2012, future growth in our audience research measurement revenues
will have the effect of further increasing this impact. Furthermore,
ARPU for our MSOs may not be directly comparable to the service fees
we may receive from these partners on a per subscription basis as the
fees that our MSOs pay us may be based upon a specific contractual
definition of a subscriber or subscription which may not be
consistent with how we define a subscription for our reporting
purposes or be representative of how such subscription fees are
calculated and paid to us by our MSOs. For example, an agreement that
includes contractual minimums may result in a higher than expected
MSOs ARPU if such fixed minimum fee is spread over a small number of
subscriptions. Additionally, ARPU for our MSO subscriptions may not
be reflective of revenues received by TiVo as in certain cases the
cost of development for such MSO customer may be deferred on our
condensed consolidated balance sheet until later when related
revenues from service fees are received and are first recognized as
Technology revenues by us until the previously deferred costs of
development are fully expensed. This recognition of service fees as
Technology revenues will have the effect of lowering ARPU for certain
of our MSO subscriptions until such costs of development are fully
expensed.  
We calculate ARPU per month for TiVo-Owned subscriptions by
subtracting MSOs'-related service revenues (which includes MSOs'
subscription service revenues and MSOs'-related advertising and
audience research measurement revenues) from our total reported net
service revenues and dividing the result by the number of months in
the period. We then divide the resulting average service revenue by
Average TiVo-Owned subscriptions for the period, calculated as
described above for churn rate. The above table shows this
calculation.  
We calculate ARPU per month for MSOs' subscriptions by first
subtracting TiVo-Owned-related service revenues (which includes
TiVo-Owned subscription service revenues and TiVo-Owned related
advertising and audience research measurement revenues) from our
total reported service revenues. Then we divide average revenues per
month for MSOs'-related service revenues by the average MSOs'
subscriptions for the period. The above table shows this calculation. 
Contacts:
Investor Relations
Derrick Nueman
408-519-9677
dnueman@tivo.com 
Media Relations
Mike Boccio 
Sloane & Company
212-446-1867
mboccio@sloanepr.com