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TiVo Lights Up Quarter

The digital video recording outfit beats estimates and posts strong user growth.

Updated from 4:52 p.m.

TiVo

(TIVO) - Get Report

continued its hot streak Thursday, posting stronger-than-expected first-quarter numbers.

Shares in the digital video recording pioneer surged 12% in postclose trading, building on a heady three-day gain in the beaten-down stock.

For the first quarter ended April 30, the Alviso, Calif., company lost $857,000, or a penny a share, against the year-ago $9.1 million, or 11 cents a share. Revenue rose 59% from a year ago to $40 million.

The figures were much better than Wall Street had expected. The Thomson First Call analyst consensus called for an 11-cent loss on revenue of $37 million.

The company doubled its subscription base to 3.3 million users, adding 319,000 net new subscriptions in the quarter. TiVo added 72,000 of its own users and 247,000

DirecTV

(DTV)

users in the quarter.

"This quarter's combination of solid revenue growth and gross margin improvement is driving the company towards our goal of profitability," said CEO Mike Ramsay.

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Ramsay said on a postclose conference call that the company is focused on making progress toward profitability, securing distribution agreements, developing products and increasing the deployment of those products. TiVo has said that there are unique advertising opportunities that can be built into the company's technology.

"We're excited with opportunites in advertising, but it's still early days," said Ramsay. He noted that TiVo feels that between deals with

Comcast

(CMCSA) - Get Report

and DirecTV, it can achieve a scale where its multiplatform capacities have the potential to change the standard in TV advertising.

While the Comcast and DirecTV deals are certainly a boon to the company, Ramsay acknowledged the rough competitive landscape for cable DVRs. And no new deals where mentioned.

Still, TiVo guided toward second-quarter revenue of $40 million and full-year revenue of $160 million, broadly in line with Wall Street's expectations.

TiVo, made famous by its TV time-shifting devices, skyrocketed this week after analyst Richard Baldry of First Albany upgraded the stock. Shares opened the week at $5.29 but shot up 30% after Baldry set a target price of $16, citing potentuial growth in the digital video recording market. DVRs allow users to skip ads and record programming while watching TV.

TiVo has faced lowered expectations about its long-term viability, thanks to competition among cable and satellite TV operators forging ahead with their own alternative technologies. Rebates and promotional costs, coupled with ongoing tech development expenses, had been weighing down TiVo as well.

But the company inked a deal with Comcast earlier this year, and on Thursday Ramsay noted that deal in talking up TiVo's prospects.

"This new relationship presents us with tremendous opportunities, as it greatly expands the available market for TiVo's unmatched DVR features and innovative advertising platform," he said. "Our Comcast and DirecTV advertising agreements reinforce our position as the technology standard for service providers, and this area will be the primary outlet for developing our advertising business."

TiVo rose 85 cents late Thursday to $7.79.