HOLLYWOOD — Strong growth from its DirecTV partnership helped digital video recorder company TiVo increase net revenue by 21%, but its net loss also widened last quarter.
Company added 264,000 subscribers in the quarter ended April 30, with nearly three-fourths resulting from its DirecTV relationship. While subscriptions from consumers who bought TiVo products at retail were up 84% from the same quarter a year ago, new DirecTV subscribers were up nearly 400%, and company’s guidance for the current quarter shows nearly all its continued subscriber growth coming from DirecTV.
That’s a mixed blessing for TiVo, as some investors have been worried that DirecTV and new corporate parent News Corp. might abandon TiVo for another, cheaper DVR provider.
With that possibility and increasing competition from cable providers with their own DVR offerings in mind, many have been looking for TiVo to potentially partner with a cable MSO. In a conference call with investors, however, TiVo CEO Mike Ramsay indicated any such partnership would be far off.
“Efforts to secure distribution with cable providers have proved more complex and time-consuming than we hoped,” he stated. “In the meantime, we’re going to compete.”
Such competition means TiVo will have to push its additional features, as its $149 minimum hardware price goes against free hardware from cable providers. Toward that end, company is planning to launch by the end of the year its previously announced TiVo-to-go service, which lets consumers move recorded programs onto computers. And it has high hopes for its growing line of combination DVR-DVD recorders.
Net revenue in the quarter was $34.5 million, while net loss increased by 15% from the same quarter a year ago to $9.1 million. Company blamed the increase on new technology development and the first stages of a $50 million investment in subscriber acquisition it announced in March.
Those trends are expected to substantially increase TiVo’s operating loss in the current quarter, to between $19 million and $21 million, compared with $8.7 million for the quarter ended April 30.
Company is expecting between 65,000 and 75,000 new retail subscribers, about the same as last quarter’s 68,000, while DirecTV subscriber additions are expected to grow from 196,000 to between 200,000 and 225,000.
Company said that keeps it on track to reach 3 million subscribers by Jan. 31 and 10 million subscribers in the next three to four years. It’s also aiming to reach sustainable profitability by January 2006.
TiVo stock rose 2% to $7.56 Tuesday before its earnings report was released.