TiVo records sub growth, stock uptick

$900k quarterly loss beats expectations

TiVo is almost in the black and investors are pleased, fast-forwarding its stock up 15%.

Continuing a recent spate of good news, the digital video recording pioneer reported a net loss of just $900,000 in the quarter ended April 30, beating guidance and expectations.

Company’s heavy investment in subscriber acquisition last year, along with a recent cut in costs, helped it significantly improve performance. Revenue was up 36% to $46.9 million, though that figure masked a 59% jump in subscriber fees to $40 million and a 26% fall in hardware sales to $6.9 million.

After running up big losses last year to grow its base of subs, TiVo now is scaling back in hopes of achieving its goal of sustainable profitability by the quarter that ends Jan. 31.

Company added 319,000 subs, up 21%. More than three-quarters of its new subs, or 247,000, came from DirecTV, from which TiVo receives just a portion of the $5-per-month sub fee; 72,000 customers separately signed up for TiVo and pay it $12.95 per month.

In addition to aiming for a profit, TiVo is focused on its rollout with new partner Comcast, skedded to take place next year. TiVo will be an add-on option for subscribers to Comcast’s generic DVR who are willing to pay an additional fee for the brand name’s advanced services. DirecTV will be rolling out its own DVR service this year, making TiVo a premium option.

Because most cable companies and satcasters are offering generic DVRs, TiVo is positioning itself as a premium addition as opposed to competing with offerings that cost less than half as much.

CEO Mike Ramsay said in an investor conference call that he hopes to sign more partnerships similar to TiVo and DirecTV.

The success of such deals will be crucial, since TiVo-owned sub growth isn’t expected to be huge in the face of more and more generic alternatives.

TiVo also is looking for long-term growth from a new advertising service it is developing. TiVo’s deals with Comcast and DirecTV allow it to deploy ads for all their DVR customers, including those with the generic option, giving it a large potential base for its offering.

TiVo hopes to run new ads while customers skip commercials on recorded programs and would split marketing revenues with cable or satellite partners.

TiVo’s net loss is projected to rise to between $4 million and $6 million next quarter, while subscriber revenue is expected to stay even at between $39.8 million and $40.6 million. Sub adds are expected to fall in the seasonally slow quarter to between 200,000 and 260,000, with 40,000 to 60,000 of its own and the rest from DirecTV.

After consistently sliding last year on investor concern that it couldn’t compete with generic offerings, TiVo stock is up 14.5% this year due to the Comcast partnership and a recent analyst upgrade.

TiVo shares closed up 3% Thursday at $6.94 before earnings were announced and shares skyrocketed in after-hours trading.

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