TiVo came out with record numbers and brought out its new CEO to talk about a change in direction at TiVo. Naturally the share price went down. It also announced 50 layoffs and a new consumer product.
TiVo hit its numbers and grew service and software revenue by 54% year on year, shame its share price has not followed suit, it has remained at an all year low, with a market cap at about the same level as its cash, plus around $100 million for the business, valuing it at about 25% of annual revenues.
New interim CEO Naveen Chopra talked about launching a new consumer product, as its direct owned customers fell once again, a common theme at TiVo over the years. Meanwhile its MSO revenue continue to fly high and Chopra said that with software and services this was now at a $100 million run rate and that TiVo could continue to operate at that level or beyond going forward. Subscriptions were up 24% to 7 million globally and up 45% in revenue terms, on the back of growth at Vodafone (Ono) in Spain and North American operators like Cogeco. There were also improvements in service revenue from its Cubiware purchase through deals at Columbus and Cablemas and increased deployments at Digitalsmiths through deals at Dish, Charter, and Time Warner Cable.
Chopra then said, “We need to chart a new path. We will focus on growth in our operator-related businesses; launch a new class of consumer products; and put in place organizational and operational changes that will drive revenues and better manage costs. We expect this simplified, pragmatic focus will drive $25-$35 million in improved Adjusted EBITDA this year; and position us to capture profitable market share in a rapidly evolving video ecosystem.”
Just what the consumer product will be is a mystery. Chopra promises to de-emphasize the humble DVR, but he may well take the TiVo cloud DVR product, throw in some content and actually come out with a service that is in effect its own OTT product. The other route he may go down is to build a set top that can be used for cable and put it into retail with content on, like Roku.
Improving profits though for Chopra rests on cutting costs for now, tough for a company that has survived primarily on patent litigation to date. On that subject Chopra said that a trial with Samsung was scheduled for March 2017.
The stock is unlikely to recover until a new CEO is brought in or Chopra is confirmed as CEO, which we feel is unlikely, or until that new consumer offering is announced.