Rovi's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Rovi Corporation (
)
Q4 2011 Earnings Call
February 16, 2012 4:30 PM ET
Executives
Chris Keller – Vice President, Finance and Investor Relations
Tom Carson – President and CEO
James Budge – Chief Financial Officer
Analysts
Ralph Schackart – William Blair
Sterling Auty – JP Morgan
Rob Stone – Cowen and Company
John Vinh – Collins Stewart
Jeff Rath – Canaccord Genuity
Ed Maguire – CLSA
Ben Swinburne – Morgan Stanley
John Bright – Avondale Partners
Todd Mitchell – Brean Murray
Presentation
Operator
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Ladies and gentlemen, thank you for standing by. Welcome to the Rovi Corporation Fourth Quarter Earnings Release Conference Call. During today’s presentation all participants will be in a listen-only mode. Following the presentation, the conference will be open for question. (Operator Instructions)
Today’s conference is being recorded, February 16, 2012. I would now like to turn the call over Chris Keller, Vice President of Finance and Investor Relations. Please go ahead.
Chris Keller
Welcome ladies and gentlemen to Rovi Corporation’s fourth quarter 2011 earnings conference call. I’m Chris Keller, and I’m joined today by Tom Carson, our President and CEO; and James Budge, our CFO.
Before we discuss our results, which were released earlier today, I would like to start with some housekeeping items. First, I would like to remind you that all statements made during our conference calls that are not statements of historical fact, including but not limited to statements regarding the company’s forecast of future revenues and earnings, the integration of Sonic acquisition, as well as business strategies and product plans, constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results could vary materially from those contained in these forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements are described in our Form 10-Q for the period ended September 30, 2011 and other filings with the SEC that are filed from time to time.
Second, our results released earlier today, as well as our discussion on this call, include non-GAAP adjusted pro forma information, which exclude as applicable non-cash items and items that impact comparability examples of such as items include amortization, equity-based compensation and discrete tax items and the tax effect of all non-GAAP adjustments.
Depreciation expense, while a non-cash item, is included in adjusted pro forma operating results as a proxy for capital expenditures to demonstrate recurring cash-based earnings. Adjusted pro forma combined company information assumes the Sonic Solutions acquisition and the Roxio consumer software disposition were both effective on January 1, 2010.
Adjusted pro forma reconciliations for historical results, including Sonic Solutions and excluding the Roxio consumer software business are in our press release. We have presented in our discussions, adjusted pro forma combined company information because this is how we have and will evaluate our business.
We believe that this presentation may be meaningful to our investors in analyzing the company’s results of operations. This presentation is not intended to be a substitute for our financial results presented in conformity with the Generally Accepted Accounting Principles in the United States, and investors and potential investors are encouraged to review the reconciliation of adjusted pro forma financial measures included in our earnings press release.
And as a final piece of housekeeping, the webcast of this conference call will be available on our Investor Relations webpage until our next quarterly earnings call.
I would now like to turn the call over to Tom.
Tom Carson
Thank you, Chris. And thanks everyone for joining us today for our quarterly conference call. As you may have seen in today’s earnings press release, we grew 2011 adjusted pro forma revenue of 12% to $716 million. After taking into account the recent sales of Roxio software business and as resulting and reclassification into discontinued operations. These revenues are at the high-end of the updated estimates we provided on January 12.
Similar to previous quarters, our business continued to grow due to new license agreements, increases in device shipments that incorporate our products or are licensed under our patents, the continued conversion of analog TV subscribers to digital and advertising growth. When combined with operating efficiencies, this resulted in a 30% year-over-year increase in adjusted pro forma EPS to $2.40. This too after taking into account the reclassification of the Roxio software business to discontinued operations was at the high end of our recently updated 2011 guidance.
I’m pleased with our financial results for the year, as well as the significant progress we made in 2011 securing customer wins for our new solutions across our verticals. I’ll discuss our progress in more detail shortly, but first James will review some of the financial metrics. James?
James Budge
Thank you, Tom. As Tom mentioned, we posted excellent double-digit percentage increases in revenue and earnings in 2011 which were consistent with the increases we anticipated and provided at our Investor Day in January just over a month ago.
Specific to Q4 we grew adjusted pro forma revenue to $177.2 million. Revenue on our service provider vertical, which is primarily comprised of Guide products and patent licensed to cable satellite and telecom companies, grew 11% year-over-year to $78.1 million in the fourth quarter. This growth was driven by the continued conversion of analog subscribers to digital, the addition of new international licensees and growth in our service provider product revenues.
It's worth noting that our service provider product revenues rose 32% versus the same quarter last year, marking the sixth consecutive quarter of 20% plus growth -- product growth year-on-year. The strength in service provider products was achieved by improved pricing on contract renewals, new applications and advertising.
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