Q1 2020 Earnings Call
Good afternoon. My name is <unk> I'll be your conference operator today.
At this time and like to welcome everyone to the Tivo Corporation, 2021st quarter results Conference call.
Oh line to be placed on me to prevent any background noise Oh now like turn the call over to Nicole New T.S. Tivo Investor Relations.
I'm, Nicole New T.S. Investor relations that she found it read today are getting shown she <unk>.
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Just just to be that I personally think filed in eight k. detailing our first quarter 2020 financial results.
In addition, he posted it downloadable model you know I our site sharing a historical financially so <unk>.
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After this call a transcript of accompanies prepared remarks will be available and thereafter, you'll be able to access recording of this call on your website and cheaper dot com as well.
Discussion include sport Licking statement within the meaning of just private Securities Litigation Reform Act 1995.
These statements relate to among other things she was gross.
Business opportunity.
Operating results strategies at each other businesses.
A future actions to achieve additional analyzed cost savings and dried long term profitable growth.
Me and for our product offerings and deployment market acceptance as teacher offering.
Future trends in viewership of entertainment content.
The timing completion, <unk> <unk> transaction I missed shepton at the combine Chivo x. three offerings by the marketplace me Sir.
<unk> and you reliance on there for the kids statement is involved risks and uncertainties that may cause actually result.
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As described no risk factors in a reports filed with the S.D.C.
Any farther than statement made it much call reflector analysis as it today and he had no plans are duties update them, except as required by law.
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Thanks, everyone for 20 minutes, a day for our first quarter 2020 earnings cool.
We find ourselves into uncharted waters as people a company and a global community.
Everyone is having to adjust to radically different environments with kids struggling to complete virtual schooling and many business operations being disrupted we all are facing new challenges, including either lower once mundane task at purchasing groceries and supplies.
Most importantly, however are dedicated these central workers are having to navigate all of this won't continued to protect the health safety and critical operations of our communities.
The public health crisis, we face is unprecedented in our top priority remains the safety of our employees partners and customers.
So for most I hope all of you and your family's Orwell.
Today are unable to give a big public and heartfelt. Thank you to everyone that people for their dedication and hard work supporting customers and partners. During these difficult times.
Despite the incredible uncertainties, resulting from the crime a virus pandemic I am police report that people and its employees to look strong financial performance. This past quarter. R. Q1 revenues were 160 million consistent with our internal plan and we exceeded expectations for a just leave it does which was.
The $8 million seems to want an increase of 55% year over year, showing significant achievement with our previously stated profitability initiatives.
We've made progress streamlining the business in our non gap total Cogs in AAPEX have decreased by 16% from the prior year.
From a strategic standpoint, well the Corona virus has been disruptive on a global scale. It has validated our belief that there's a tremendous desire for the type of unified entertainment.
Finding and watching experience provided by Kibo.
The overall strategic relevance of our business model has never been grader.
Many of People's secular trends not only remain intact, but have accelerated.
We've continued to execute against the two key value drivers that I've highlighted Empire calls.
The first is launching people wholeheartedly into the stream towards the cutting edge streaming products. They uniquely sol emerging challenges a digital entertainment.
The second is instituting a strong operating focus and excellence throughout the people organization through a combination of smart investments in long term growth.
Discipline spending cost controls and keeping these efforts aligned with a clear strategic vision.
First as it relates to our product business viewership metrics. So that people are of course watching more fun during these times.
For example, starting March 23rd the second week of shelter and police ordinances.
<unk>, 58% increase in entertainment watching the cross the Tivo platform.
Not only was three 600% increase and viewing a pandemic related titles.
We also saw a significant increases in cooking titles kids programming and news.
As people are spending more time at home, making entertainment easy to find watch and enjoy has never been more vital and essential.
I'm proud of the Tivo T. rising to support this increase volume. Despite all of the challenges are working from home.
These viewership metrics bode well for T. Bo.
TV, operator households, deploying the tivo user experience are up from the prior year in the Americas, and we continue to transition more legacy Classic guide households that people experience for.
We are working closely with our customers to help them adapt to the new environment as well.
Including developing a self install process for our cable operators. So they no longer have to go into customers homes to set up an entertainment viewing platform.
As a result, we expect or Android T.V. based I.P.T.V. deployments to fuel footprint growth for 2020.
We now have 11, North American operators will have entered into agreements to deploy the solution.
Nine last quarter, which includes broadband only households.
Also continued to expand internationally and the last 90 days people has moved from the sales when stage to actual deployment of our Andrei T.V. based I.P.D. platform at three major operators Liberty Latin America R.C.N.N.T.D.S. Telecom.
On the new product front the stream for Kay products that we previewed in January and the consumer electronics show tuned incredibly positive reception from media and the wider industry was launched this morning on people Dot com.
With an introductory price of 49 99, including the pre seven day trial asleep T.V. for new Slingtv customers stream for K. will provide a new way to integrate video streaming services Netflix Prime video and Google played with life TV streaming provided by saying T.V. and are.
Own Tivo plus content.
During the coven 19 pandemic viewers are struggling to find their favorite streaming shows they are overwhelmed by an overflowing see upstreaming naps.
Stream for K. integrate all of that content with recommendation in search features to make it easier to find watch 'em enjoyed the best Entertainment news and sports from today's most pump through their services.
He was stream for K. users can also axes people plus are growing video network, which delivers lie extremely channels and thousands of movies and T.V. shows the viewers and at three environment.
Alongside the TV and subscription services, they already use them, but.
This week, we announced a new content deal with Pluto, T.V., which will add over 70, new channels to the current Tivo plus lineup popular channels, such as traveler sports <unk> Cheddar Tastemade USA today Wired in film rise movies among others.
Disagreement will be a major expansion to people plus as it will be able to distribute exclusive Viacom and C.B.S. programming movies News sports last next an African American programming from Plano T.V.'s catalog.
Moving onto our I.P. licensing business, our first quarter revenues were up 10 per cent euro per year.
Continued to add to R.O.T.T. licensing program, where they knew long-term ice device with another major content provider network this quarter.
We also had I.P. license success internationally in Q1 by renewing Maltais your agreements with N.T.T., Docomo, Japan's leading mobile provider and with Tonight, a world leader in the design and manufacturing of innovative consumer electronics, and <unk> products, including T.V.'s and Blue Ray players.
We are pleased with the progress of R.I.P. licensing visit.
As it continues to build insecure a strong diverse space of customers. This progress has continued despite our ongoing dispute Comcast.
Turning now to Comcast I am pleased we achieved an important big tree in the federal circuit, which in March affirmed Roby is when against Comcast in our first International Trade Commission kicks. In addition, D.I.P.C.'s final determination in our second I.P.C. case in April.
The administrative law judges initial determination finding that Comcast infringed on another one a robotic pets.
Are two victories against contest at the I.T.C.R. significant because they reaffirmed that Comcast is subject to I.D.C. jurisdiction and confirmed that the I.P.C. will continue to be a day.
Or we can seek to protect our valuable intellectual property against Comcast ongoing I'm not raise you can <unk>.
We are one of the few beating technology companies that has been able to secure multiple exclusion orders in successive I.T.C. actions over the past few years under scoring the relevance and strength of our intellectual property.
As a result, these rulings and our other ongoing efforts to protect our valuable intellectual property Comcast has been forced to remove important features and functionality from their excellent excellent.
These are features and functions that all of our other license here, including Comcast competition can't continue to offer to their subscribers.
As we look to the future we will continue to take the necessary steps to protect our I.P. against unauthorized use by contest for.
For example is reported last quarter, we completed the trial and the third I.T.C. case against Comcast in January.
The administrative law judges initial determination for the third I.T.C.K. is currently do by June 29th 2020, and the Commission's final determination is due by October 29 2020.
Before I turn things over to West. So you can walk through the specifics of our financial performance I said earlier that we had been fortunate in that our business model and end markets have proven to be extremely durable. Despite the overall macro economic conditions.
The overall strategic relevance of our business remains Bible. That's entertainment content is a critical outlet for people during this challenging time.
With frustrations of daily life, none of US went to waste time struggling displaying entertainment, but.
It'd be the money.
Uplifting stories, the cautionary tales, the distraction to the good drama or reality series or the current news of our World. We believe people solutions are perfectly targeted to this challenging world.
Once again, I would especially like to think the entire tivo tea for their dedication in support during this time.
We had been laying the groundwork over the last year to streamline the business and I'm. So proud of the way. This team has stepped up regardless of the external challenges to not only maintain our strong financial results, but also to remain innovative by launching new products like people Street and the data from the other offerings such as our self installed I.P.T.V.
Solution.
Finally, I would like to provide you with an update on People's merger with experience, we have filed definitive proxy materials with the S.P.C. and have male these materials to our stock holders for our special meeting the stockholders to bow time be Experie transaction.
Stockholder meeting, which would be held virtually scheduled for may 29th.
Our teams have been working diligently on integration planning and we expect to complete the merger into current quarter.
We are genuinely excited by this transformative merger with experience and we believe that challenges of our current environment have highlight.
The importance of this teaching value being able to successfully bring together the experie and T. Bo technology products in teams.
That I'd like to turn to west to talk a little more about People's Q1 performs.
Thank you days as they've just mentioned, we had a strong quarter and they challenging macro economic environment.
The first quarter of 2020 revenue was in line with our internal plan and we continue to make very strong progress with our profitability in the should.
Turning to our first quarter results on a consolidated basis revenues were 159.9 million up 1% from the first quarter of 2019.
This increase was primarily due to I.P. licensing revenues, increasing by 6.5 million or 10% year over year, driven by subscriber growth and new licenses executed once a year ago period.
The increase in I.P. licensing revenue was partially offset by 4.8 million dollar decline and product revenue as a result of revenue from a perpetual legacy classic I've license agreement with an international so customer executed in a year ago period, which was partially offset by an increase in T.V. viewers battered rubbing it.
We actually did Q1 with approximately 74 million and contracted quarterly product Runrate revenues, a 2 million dollar decrease from Q. for after removing the previously the suppose or million dollar perpetual license in Latin America from the queue for calculation contracted product Runrate Brooke.
This decrease was primarily due to a declining consumers subscription and metadata rubbing it.
Contracted quarterly product Runrate revenues are contracted brothers generally long term for our core products.
Moving onto the I.P. licensing business, we exited Q1 with approximately 70 million and contracted quarterly I.P. licensing runrate rubber, which excludes catch up revenues intended to make a whole for the pre licensed period of years.
This was plot with the fourth quarter after removing the 4 million dollar recording adjustment, we discussed on our fourth quarter earnings taught.
Turning the costs gas total operating costs and expenses and Q1, Twentytwenty, where 317.5 million.
During the quarter. The company recorded 171.6 million dollar noncash goodwill impairment charge driven by a decrease in the trading press achievers common stock import.
Compared to Q1, 2019, we reduced the research and development and selling general and administrative costs by 17.7 million, primarily as a result of benefits from are ongoing transformation and restructuring activities.
Operating loss and Q1 was 157.6 million and our gap loss support income tax. This was 179.6 million both driven by the good well impairment charge.
In terms of Arts, you want to Nongaap results Nongaap total cause and effect was 101.7 months.
Down 19.1 million for 16% year over year as a result of our focus execution on cost savings, partially offset by an increase in patent litigation costs.
The last three completed quarters, we took actions that will produce 27 million in any wise cost savings and we anticipate taking actions in the second quarter of Twentytwenty that will produce an additional 8 million annual theory.
Adjusted EBITDA on C., one was 58.2 million 20.8 million or 55% you're over here and non got pretax income was 38.5 million up 13.1 million or 52 per se you're over here.
The improvements in adjusted even thought and non got pretax income were driven by our continued efforts to optimize the.
For the first quarter estimated calf taxes were 6 million.
Gas diluted weighted average shares outstanding were 127.1 million and non calculated weighted average shares outstanding were 120 quite one.
For those interested in calculating nongaap U.P.S. measure take our non got pretax income subtract, our cash taxes and divide by Nongaap weighted average shares outstanding.
We ended the first quarter with cash in cash equivalent of 108.5 million.
Decrease of 316.5 million from the end up 2019, which reflects the repayment of 295 million Inconvertible notes during the quarter and 20.3 million of cash used an operation.
Workforces around the world shifted to working from home.
March due to the covert 19 pandemic, we saw a certain payments that we're doing mark shift into April.
Mentions in 2000 maintain weaver very focused on company execution and have carried that focused into twentytwenty.
As we mentioned today, the company's Q1, Twentytwenty revenues were consistent with our internal plant.
To date, we are fortunate that the cope in 19 pandemic has not had a significant impact on the companies are <unk>.
Substantial majority of our revenue comes from agreements with P.T.V. operators and others in the video delivery industry.
These agreements also provide us with a good degree of visibility into our Twentytwenty revenue aspect.
However, given depending merger with Experie Corporation. The company is not providing it standalone financial outlook for the remainder of beer.
We expect a combined company will issue financial expectation after the second quarter.
Thank you for your time today, why we remain committed the product innovation, we've made a lot of progress on implementing our cost savings and driving profitability in the cup.
Now, let me turn it back today for a few final comments.
Thank you Wes before we end the call today I would once again like to think our employees customers and partners. During this time.
Ruin please stay safe unhealthy.
Ladies and gentlemen, discrete colors today's conference call. Thank you for participating you may now disconnect.
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