(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) | |||
, | , | ||||
(Address of principal executive offices, including zip code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
(Nasdaq Global Select Market) | ||||
N/A | ||||
(Nasdaq Global Select Market) |
Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Exhibit Number | |
99.1 | |
104 | Cover Page Interactive Data File (embedded within Inline XBRL document) |
TiVo Corporation (Registrant) | ||
Date: | By: | /s/ Pamela Sergeeff |
May 6, 2020 | Pamela Sergeeff | |
Executive Vice President & General Counsel |
TiVo Corporation 2160 Gold Street San Jose, CA 95002 |
• | Q1 2020 revenues were $159.9 million, consistent with our internal plan. |
• | TiVo made progress streamlining the business and our Non-GAAP Total COGS and OpEx decreased by 16% from the prior year. |
• | The Company made significant progress with our profitability initiatives. Q1 GAAP loss from operations was $157.6 million (income from operations was $14.0 million excluding goodwill impairment). As a result of our focused execution on cost savings, our Q1 Adjusted EBITDA was $58.2 million, an increase of 55% from Q1 2019. |
• | The Company filed definitive proxy materials with the SEC on April 22, 2020 and has mailed these materials to its stockholders for the Special Meeting of Stockholders to vote on the Xperi transaction. |
• | The special meeting is scheduled for May 29, 2020 and we expect to complete the merger in the current quarter. |
• | Many of TiVo’s secular trends not only remain intact, but have accelerated. Viewership metrics show that people are watching more content. Starting March 23rd, the second week of shelter in place ordinances, we saw a 58% increase in entertainment watching across the TiVo platform. |
• | Stream 4K became available for purchase via TiVo.com and will provide a new way to integrate video streaming services like Netflix, Prime Video, and Google Play with live TV streaming provided by Sling TV and our own TiVo+ content. |
• | The Company continues to expand its Android TVTM-based IPTV version of TiVo User Experience 4. The Company now has eleven North American operators who have entered into agreements to deploy this solution, up from nine last quarter. In the quarter Cincinnati Bell selected TiVo’s IPTV Platform for their next generation video solution and will deploy our solution starting later this year. In the last 90 days TiVo has moved from the sales win stage to actual deployment of our IPTV/Android platform at three major operators: Liberty Latin America, RCN and TDS Telecom. |
• | The IP Licensing business continues to build on a strong, diverse base of customers and revenues in the quarter were up 10% year-over-year. |
• | Adding to TiVo’s OTT licensing program, we entered into a new long-term IP license with another major content provider network this quarter. |
• | TiVo continued our international IP licensing success in Q1 by renewing multi-year agreements with NTT Docomo, Japan’s leading mobile provider, and with Funai, a world leader in the design and manufacturing of innovative consumer electronics and OEM products including TVs and Blu-Ray players, for its products in the Japanese and U.S. markets. |
• | The Federal Circuit affirmed TiVo’s win against Comcast in the Company’s first International Trade Commission case that was filed in 2016. This victory was especially significant because it reaffirmed that Comcast is subject to ITC jurisdiction, and confirmed that the ITC will continue to be a venue where we can seek to protect the Company’s valuable IP against Comcast’s ongoing, unauthorized use. |
Quarterly Financial Information | (In thousands) | |||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
GAAP Consolidated Results | ||||||||||
Product Revenue | $ | 86,476 | $ | 91,303 | (5 | )% | ||||
IP Licensing Revenue | 73,385 | 66,932 | 10 | % | ||||||
Total Revenues, net | $ | 159,861 | $ | 158,235 | 1 | % | ||||
GAAP Total operating costs and expenses | $ | 317,480 | $ | 166,255 | 91 | % | ||||
Total OpEx Excluding Goodwill Impairment | $ | 145,908 | $ | 166,255 | (12 | )% | ||||
Operating loss | $ | (157,619 | ) | $ | (8,020 | ) | 1,865 | % | ||
Loss before income taxes | $ | (179,600 | ) | $ | (20,326 | ) | 784 | % | ||
GAAP Diluted weighted average shares outstanding | 127,124 | 124,422 |
(In thousands) | ||||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Non-GAAP Consolidated Results | ||||||||||
Non-GAAP Total COGS and OpEx | $ | 101,655 | $ | 120,794 | (16 | )% | ||||
Adjusted EBITDA | $ | 58,206 | $ | 37,441 | 55 | % | ||||
Non-GAAP Pre-tax Income | $ | 38,478 | $ | 25,349 | 52 | % | ||||
Cash Taxes | $ | 6,036 | $ | 4,926 | 23 | % | ||||
Non-GAAP Diluted Weighted Average Shares Outstanding | 128,105 | 125,123 |
• | Product revenues decreased $4.8 million, or 5% year-over-year, driven by a $6.7 million perpetual Passport license agreement with an international MSO customer executed in the three months ended March 31, 2019, which was partially offset by a $2.9 million increase in TV viewership data revenue. |
• | IP Licensing revenues increased by $6.5 million, or 10% year-over-year, driven by new deals signed in our New Media, International Pay TV Providers and Other vertical and an increase in revenue from US Pay TV Providers due to subscriber growth. |
• | Non-GAAP Total COGS and OpEx decreased by $19.1 million, or 16% year-over-year, as a result of our focused execution on cost savings, partially offset by a $3.0 million increase in patent litigation costs. |
• | During the quarter, the Company recorded a $171.6 million non-cash Goodwill impairment charge driven by a decline in the trading price of TiVo's common stock during the three months ended March 31, 2020. |
(In thousands) | ||||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
Platform Solutions | $ | 64,535 | $ | 71,037 | (9 | )% | ||||
Software and Services | 21,636 | 19,902 | 9 | % | ||||||
Other | 305 | 364 | (16 | )% | ||||||
Total Product Revenue, net | 86,476 | 91,303 | (5 | )% | ||||||
Adjusted Operating Expenses | 67,844 | 82,890 | (18 | )% | ||||||
Adjusted EBITDA | $ | 18,632 | $ | 8,413 | 121 | % | ||||
Adjusted EBITDA Margin | 21.5 | % | 9.2 | % | ||||||
Total Product Revenue, net | $ | 86,476 | $ | 91,303 | (5 | )% | ||||
Hardware | (2,623 | ) | (2,074 | ) | 26 | % | ||||
Other Products | (305 | ) | (364 | ) | (16 | )% | ||||
Core Product Revenue (excludes revenue from Hardware and Other Products) | $ | 83,548 | $ | 88,865 | (6 | )% |
(In thousands) | ||||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | % Change | ||||||||
US Pay TV Providers | $ | 45,109 | $ | 42,117 | 7 | % | ||||
CE Manufacturers | 8,334 | 8,618 | (3 | )% | ||||||
New Media, International Pay TV Providers and Other | 19,942 | 16,197 | 23 | % | ||||||
Total IP Licensing Revenue, net | 73,385 | 66,932 | 10 | % | ||||||
Adjusted Operating Expenses | 22,120 | 21,807 | 1 | % | ||||||
Adjusted EBITDA | $ | 51,265 | $ | 45,125 | 14 | % | ||||
Adjusted EBITDA Margin | 69.9 | % | 67.4 | % |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues, net: | |||||||
Licensing, services and software | $ | 157,238 | $ | 156,161 | |||
Hardware | 2,623 | 2,074 | |||||
Total Revenues, net | 159,861 | 158,235 | |||||
Costs and expenses: | |||||||
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets | 37,396 | 39,433 | |||||
Cost of hardware revenues, excluding depreciation and amortization of intangible assets | 5,022 | 4,093 | |||||
Research and development | 33,744 | 41,381 | |||||
Selling, general and administrative | 35,897 | 45,993 | |||||
Depreciation | 4,968 | 5,364 | |||||
Amortization of intangible assets | 28,142 | 28,178 | |||||
Restructuring and asset impairment charges | 739 | 1,813 | |||||
Goodwill impairment | 171,572 | — | |||||
Total costs and expenses | 317,480 | 166,255 | |||||
Operating loss | (157,619 | ) | (8,020 | ) | |||
Interest expense | (17,049 | ) | (12,161 | ) | |||
Interest income and other, net | 187 | 1,775 | |||||
Loss on interest rate swaps | (5,119 | ) | (1,721 | ) | |||
Loss on debt extinguishment | — | (199 | ) | ||||
Loss before income taxes | (179,600 | ) | (20,326 | ) | |||
Income tax (benefit) expense | (416 | ) | 6,318 | ||||
Net loss | $ | (179,184 | ) | $ | (26,644 | ) | |
Basic loss per share | $ | (1.41 | ) | $ | (0.21 | ) | |
Weighted average shares used in computing basic per share amounts | 127,124 | 124,422 | |||||
Diluted loss per share | $ | (1.41 | ) | $ | (0.21 | ) | |
Weighted average shares used in computing diluted per share amounts | 127,124 | 124,422 | |||||
Dividends declared per share | $ | — | $ | 0.18 |
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 108,519 | $ | 373,719 | |||
Short-term marketable securities | — | 51,293 | |||||
Accounts receivable, net | 164,618 | 158,016 | |||||
Inventory | 2,944 | 3,197 | |||||
Prepaid expenses and other current assets | 27,393 | 27,023 | |||||
Total current assets | 303,474 | 613,248 | |||||
Property and equipment, net | 43,706 | 48,264 | |||||
Intangible assets, net | 386,524 | 415,054 | |||||
Goodwill | 1,018,310 | 1,189,825 | |||||
Right-of-use assets | 56,405 | 59,888 | |||||
Other long-term assets | 56,183 | 56,293 | |||||
Total assets | $ | 1,864,602 | $ | 2,382,572 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 81,427 | $ | 126,249 | |||
Unearned revenue | 48,502 | 50,968 | |||||
Current portion of long-term debt | 66,450 | 343,035 | |||||
Total current liabilities | 196,379 | 520,252 | |||||
Unearned revenue, less current portion | 37,292 | 39,879 | |||||
Long-term debt, less current portion | 625,867 | 642,504 | |||||
Deferred tax liabilities, net | 29,603 | 34,231 | |||||
Long-term lease liabilities | 58,303 | 61,603 | |||||
Other long-term liabilities | 14,596 | 10,420 | |||||
Total liabilities | 962,040 | 1,308,889 | |||||
Stockholders' equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 130 | 129 | |||||
Treasury stock | (38,819 | ) | (38,176 | ) | |||
Additional paid-in capital | 3,247,562 | 3,235,996 | |||||
Accumulated other comprehensive loss | (5,021 | ) | (3,612 | ) | |||
Accumulated deficit | (2,301,290 | ) | (2,120,654 | ) | |||
Total stockholders’ equity | 902,562 | 1,073,683 | |||||
Total liabilities and stockholders’ equity | $ | 1,864,602 | $ | 2,382,572 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Total Revenues, net | $ | 159,861 | $ | 158,235 | |||
Hardware | (2,623 | ) | (2,074 | ) | |||
Other Products | (305 | ) | (364 | ) | |||
Core Revenue (excludes revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) | $ | 156,933 | $ | 155,797 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Product Revenue | |||||||
Platform Solutions | $ | 64,535 | $ | 71,037 | |||
Software and Services | 21,636 | 19,902 | |||||
Other | 305 | 364 | |||||
Total Product Revenue, net | 86,476 | 91,303 | |||||
IP Licensing Revenue | |||||||
US Pay TV Providers | 45,109 | 42,117 | |||||
CE Manufacturers | 8,334 | 8,618 | |||||
New Media, International Pay TV Providers and Other | 19,942 | 16,197 | |||||
Total IP Licensing Revenue, net | 73,385 | 66,932 | |||||
Total Revenues, net | $ | 159,861 | $ | 158,235 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Total Product Revenue, net | $ | 86,476 | $ | 91,303 | |||
Hardware | (2,623 | ) | (2,074 | ) | |||
Other Products | (305 | ) | (364 | ) | |||
Core Product Revenue (excludes revenue from Hardware and Other Products) | $ | 83,548 | $ | 88,865 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Adjusted EBITDA: | |||||||
Product | $ | 18,632 | $ | 8,413 | |||
IP Licensing | 51,265 | 45,125 | |||||
Corporate | (11,691 | ) | (16,097 | ) | |||
Adjusted EBITDA | $ | 58,206 | $ | 37,441 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP loss from continuing operations before income taxes | $ | (179,600 | ) | $ | (20,326 | ) | |
Amortization of intangible assets | 28,142 | 28,178 | |||||
Restructuring and asset impairment charges | 739 | 1,813 | |||||
Goodwill impairment | 171,572 | — | |||||
Equity-based compensation | 6,296 | 8,379 | |||||
Merger, separation and transformation costs | 4,026 | 1,132 | |||||
Transition and integration costs | 82 | 595 | |||||
Loss on debt extinguishment | — | 199 | |||||
Impairment of strategic investment | 250 | — | |||||
Change in escheat liability | — | 165 | |||||
Amortization of note issuance costs | 765 | 598 | |||||
Amortization of convertible note discount | 2,032 | 3,409 | |||||
Mark-to-market loss related to interest rate swaps | 4,174 | 1,625 | |||||
Interest on escheat liability | — | (418 | ) | ||||
Non-GAAP Pre-tax Income | $ | 38,478 | $ | 25,349 |
Three Months Ended March 31, | |||||
2020 | 2019 | ||||
GAAP Diluted weighted average shares outstanding | 127,124 | 124,422 | |||
Dilutive effect of equity-based compensation awards | 981 | 701 | |||
Non-GAAP Diluted Weighted Average Shares Outstanding | 128,105 | 125,123 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets | $ | 37,396 | $ | 39,433 | |||
Equity-based compensation | (707 | ) | (968 | ) | |||
Transition and integration costs | (62 | ) | (222 | ) | |||
Non-GAAP Cost of Licensing, Services and Software Revenues | $ | 36,627 | $ | 38,243 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Cost of hardware revenues, excluding depreciation and amortization of intangible assets | $ | 5,022 | $ | 4,093 | |||
Equity-based compensation | (33 | ) | (30 | ) | |||
Non-GAAP Cost of Hardware Revenues | $ | 4,989 | $ | 4,063 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Research and development expenses | $ | 33,744 | $ | 41,381 | |||
Equity-based compensation | (2,237 | ) | (2,134 | ) | |||
Merger, separation and transformation costs | (84 | ) | — | ||||
Transition and integration costs | (6 | ) | (408 | ) | |||
Non-GAAP Research and Development Expenses | $ | 31,417 | $ | 38,839 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Selling, general and administrative expenses | $ | 35,897 | $ | 45,993 | |||
Equity-based compensation | (3,319 | ) | (5,247 | ) | |||
Merger, separation and transformation costs | (3,942 | ) | (1,132 | ) | |||
Transition and integration costs | (14 | ) | 35 | ||||
Non-GAAP Selling, General and Administrative Expenses | $ | 28,622 | $ | 39,649 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Total operating costs and expenses | $ | 317,480 | $ | 166,255 | |||
Goodwill impairment | (171,572 | ) | — | ||||
Total OpEx Excluding Goodwill Impairment | $ | 145,908 | $ | 166,255 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Total operating costs and expenses | $ | 317,480 | $ | 166,255 | |||
Depreciation | (4,968 | ) | (5,364 | ) | |||
Amortization of intangible assets | (28,142 | ) | (28,178 | ) | |||
Restructuring and asset impairment charges | (739 | ) | (1,813 | ) | |||
Goodwill impairment | (171,572 | ) | — | ||||
Equity-based compensation | (6,296 | ) | (8,379 | ) | |||
Merger, separation and transformation costs | (4,026 | ) | (1,132 | ) | |||
Transition and integration costs | (82 | ) | (595 | ) | |||
Non-GAAP Total COGS and OpEx | $ | 101,655 | $ | 120,794 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Operating loss | $ | (157,619 | ) | $ | (8,020 | ) | |
Depreciation | 4,968 | 5,364 | |||||
Amortization of intangible assets | 28,142 | 28,178 | |||||
Restructuring and asset impairment charges | 739 | 1,813 | |||||
Goodwill impairment | 171,572 | — | |||||
Equity-based compensation | 6,296 | 8,379 | |||||
Merger, separation and transformation costs | 4,026 | 1,132 | |||||
Transition and integration costs | 82 | 595 | |||||
Adjusted EBITDA | $ | 58,206 | $ | 37,441 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP Interest expense | $ | (17,049 | ) | $ | (12,161 | ) | |
Amortization of note issuance costs | 765 | 598 | |||||
Amortization of convertible note discount | 2,032 | 3,409 | |||||
Reclassify current period cost of interest rate swaps | (946 | ) | (97 | ) | |||
Interest on escheat liability | — | (418 | ) | ||||
Non-GAAP Interest Expense | $ | (15,198 | ) | $ | (8,669 | ) |
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