TiVo Q3: Beats EPS, But Business Still Screwed

The good news in TiVo’s Q3: losses shrank ($8.2 million loss vs. $11 million a year ago), and EPS of -$0.08 beat consensus of -$0.13.  EBITDA was slightly positive. Revenue also increased 11%, from $58.3 million, up from $52.5 million y/y.

And now the far more important bad news:

  • Net subscriber ads decreased to 4,000 from 53,000 last year.
  • Monthly churn increased from 1.0% to 1.3%
  • Total subscribers decreased from 4.7 million to 4.1 million, with the bulk of those being partner subscribers.
  • Total TIVO-owned subscribers increased only modestly, from 1.7 million from 1.6 million
  • Subscriber acquisition cost increased significantly, from $232 to $303 (and that’s for gross ads–cost per net ad absolutely skyrocketed).
  • Cash is becoming an issue: only $42 million left.
  • Guidance: only a modest sequential revenue increase expected in Q4, with similar losses to this quarter.

The problem remains the same: TiVo’s former partners are now competing aggressively with it, and cable companies are offering TiVo-like service themselves. You can’t save your way to prosperity, and even if TiVo manages to turn a profit (far from a given at this point), the dead-in-the-water subscriber growth will barely keep it alive.

TiVo remains an interesting acquisition candidate: The brand and quality of service are (generally) excellent and are worth something. At this point, however, an acquisition is about all shareholders can hope for.

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