TiVo (TIVO) Down 44.8% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for TiVo (NASDAQ:TIVO). Shares have lost about 44.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TiVo due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

TiVo Q4 Loss Narrows Y/Y, Revenues Beat Estimates

TiVo’s fourth-quarter 2019 loss of $1.75 per share narrowed from the year-ago quarter’s loss of $2.33.

On a non-GAAP basis, earnings per share came in at 33 cents, compared with 22 cents in the year-ago quarter.

TiVo’s revenues of $175 million surpassed the Zacks Consensus Estimate of $169 million and improved 4% year over year. Increase in IP licensing revenue driven by new deals signed in New Media, International Pay TV was a key driver.

The company’s core revenues (excluding revenues from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) of $171 million (97.7% of total) reflected a 6.3% decrease from the year-ago quarter.

Further, the company mentioned that the separation of its product division from its intellectual property (IP) licensing unit is on track and the split-up is likely to be completed in April 2020.

At the same time, management sounded very optimistic about its agreement to combine in an all-stock transaction with Xperi. The company believes that combining the respective product and IP business to operate as separate business units will put them in a stronger operating and competitive position.

Quarter in Detail

In terms of business segments, Product Revenues were down 5% to $91.7 million. This decline was primarily due to a decrease in consumer revenues attributed to an increase in the amortization period for product lifetime subscriptions and lower hardware sales. Lower Platform Solutions revenue from pay TV customers was also a downside.

Revenues from Platform Solutions decreased 8% to $68.6 million.

Additionally, revenues from Other products, primarily legacy analog ACP product, plunged 57% to $1.7 million. However, Software and Services improved 18% to $19.8 million, aided by new TV Viewership Data deals.

Core Product revenues (excluding revenues from Hardware and Other Products) fell 2% to $87.6 million.

IP Licensing Revenues increased 16% year over year to $83.5 million. Revenues from US Pay TV Providers, CE Manufacturers, and New Media, International Pay TV Providers and Other grew 11%, 19% and 24% to $47.2 million, $10.6 million and 425.7 million, respectively.

Adjusted EBITDA was up 45% from the year-ago quarter to $61.2 million due to higher IP licensing revenues and the company’s cost-saving initiatives.

TiVo exited the reported quarter with cash, cash equivalents and short-term marketable securities of $425 million compared with $276.7 million at the end of the previous quarter.

Guidance

For 2020, TiVo expects revenues in the range of $650-$690 million. Adjusted EBITDA is anticipated between $230 million and $260 million.

Note: The EPS data mentioned in the text of this section differs from the rest of report due to the difference in calculation or consideration of one-time items.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -10.53% due to these changes.

VGM Scores

Currently, TiVo has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise TiVo has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.