I took a few notes listening to the call live – but I’ve been up since midnight, and at work since 05;00 (it is 20:00), so I’m a little fuzzy. I’m listening to the web replay right now to see if I missed anything really key. I’ll update this entry if so – but to throw some things out there:
They ended the quarter with 419,000 net new subs, about 2.3 million subs total. 316,000 net new from DirecTV. 103,000 standalone – up 75% year of year. Service revenue is up 73% over a year ago period and they’re in 4,000 retail stores now. They made $27.7 million in service revenue, $700,000 from technology licensing, $27.9 million in HW revenues. They had a $26 million operating loss, which is less than forecast.
For Q4 they project 575,000-700,000 net new subs – 375,000-425,000 DTV, 200,000-275,000 SA. For the full year they’ll have 1.1-1.15 million DTV net new subs, and 434,000-509,000 net new SA subs. For a total of 1.55-1.65 million net new subs.
For Q4 they’re looking at service and technology revenue of $32.8-33.8 million, for $114.1-115.1 million for the year. In Q4 they’ll have a $33-36 million operating loss, and $79.9-82.7 million for the year.
OK – now for the interesting stuff.
They stressed, repeatedly, that they’re looking to compete through technology innovation and offering products and features their competitors don’t have. They reiterated that TiVoToGo will be out this year. They mentioned increasing they PC integration, and TiVoToGo is part of that, but they implied there is more in the pipeline. They mentioned broadband content distribution, with NetFlix being one aspect of that. DirecTV has somewhat reversed course and has begun heavily promoting TiVo with low prices, backed by new, aggressive ad campaigns. And the good news is NDS appears to have delayed they’re promised DirecTV DVR until late 2005 – giving TiVo another year to grab market share. They HD DirecTV box has been very successful, encouraging them to look at Hi-Def for the standalone market, and it sounds like we’ll be seeing something there. And for the first time they directly stated they feel the time is right to consider CableCARD!
My choice quote:
“The main areas of differentiation for TiVo during the next year will include; DVD Recorders, home networking and PC integration, high definition DVRs, soon to be delivered TiVoToGo, broadband content delivery, and we feel the time is right to start to consider integration of CableCARD technology to enable TiVos to be digital cable ready, eliminating the need for a digital set top from your cable company, dramatically easing installation and setup.”
CableCARD: “It makes sense for us to look at creating products that will support that technology. We will do that, we’re not stating a time frame in which we’ll do that, but it is definitely… we think the time is right to start exploring that.” (I’m still hopefully we’ll see something at CES2005, even if just an early announcement of plans.)
They’ve have a good response from the DVD recorders and they feel very positive about that product category.
Over time they’re around break even on the HW – it is trending near break even. Basically as manufacturing costs drop, they also drop wholesale prices, to drop retail prices, so they undulate above and below break even on HW sales and over time it averages out. But that’s before rebates – the rebates are a marketing expense and contribute to the operating loss. But they do feel the $99 price point is key, and reaching it has opened the market for a number of new users.
They still think they can be profitable by the end of 2005 – but they’re reserved about it until they see if Q4 meets expectations, since they get about half their annual subs in Q4. (Holiday shoppers.) They don’t anticipate the need to raise additional capital.
“80% of TiVo owners have a broadband connection.”