TiVo Records a Messy Quarter

Overall Tivo-owned subscriptions rose 24% year over year to 1.6 million. Cumulative total subscriptions rose 11% year over year and rose slightly on a sequential basis to 4.4 million. Net subscription additions were hurt by a net decline in DirecTV (DTV Quote) TiVo box deployment. Churn was 1%, and 138,000 lifetime subscriptions have reached the end of the 48-month period that TiVo uses for revenue recognition.

Online sales as a percentage of total sales increased from 33% last quarter to 43% this quarter. Technology sales rose from about $900,000 to $3.6 million on the back of development work in conjunction with Comcast (CMCSA Quote), but fell short of guidance as certain advertising deals did not close during the quarter. Subscriber acquisition costs were $287, down 7% from the year-ago quarter.

The company ended the quarter with $107 million in cash and equivalents, which includes $65 million from a common stock offering. Management expects to see an improvement in its cash position subsequent to the holidays.

Looking Ahead

TiVo initiated a new pricing plan, with no upfront charge for a single tuner and a reduced fee for dual tuner boxes. Subscription plans range from $19.95 per month for one-year plans to $14.95 per month for two-year plans and $12.95 per month for three-year plans. The company also created uniform subscription pricing across online and retail channels.

The lifetime subscription plan is no longer being offered. (By the way, my single-tuner TiVo, which I paid for six years ago, is still operating under a lifetime subscription plan.) The company will be evaluating the no-upfront-cash scheme for tuners after the holiday season.

For its fourth quarter, TiVo is expecting total revenue of $54 million to $55 million, which is significantly below the current consensus of $61.2 million. It is also forecasting a net loss of $33 million to $38 million, which I calculate to be a loss of 36 cents to 41 cents per share, much worse than current estimates for a 24-cent loss.