Why Is TiVo (TIVO) Up 10.1% Since Last Earnings Report?

A month has gone by since the last earnings report for TiVo (TIVO). Shares have added about 10.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TiVo due for a pullback? 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. <p style="text-align: justify;">TiVo reported dismal results for second-quarter 2018 as both its top and bottom line declined on a year-over-year basis.<br /><br />The company reported loss of 17 cents per share, wider than the year-ago quarter’s loss of 4 cents.<br /><br />The company’s non-GAAP earnings per share came in at 26 cents compared with 51 cents in the year-ago period.<br /><br />The Zacks Consensus Estimates for earnings was pegged at 27 cents.<br /><br />TiVo’s revenues decreased 17.1% year over year to $172.9 million and also missed the Zacks Consensus Estimate of $178 million. The decline in revenues was primarily due to lower revenues from the Legacy TiVo Time Warp IP deals and the company’s transition away from selling analog and hardware products.<br /><br />The company’s core revenues (excludes revenue from Legacy TiVo Solutions IP Licenses, Hardware and Other Products) were $160.2 million, a decline of 8% from the year-ago quarter.<br /><br /><strong>Quarter in Details</strong><br /><br />The company’s revenues from the Licensing, services and software division dropped 14.8% year over year to $169.6 million. The division contributed 98.1% to total revenues.<br /> <br />Hardware division’s revenues declined to $3.3 million from $9.6 million recorded in the year-ago quarter and contributed 1.9% to total revenues.<br /><br />In terms of business segments, Product revenues were down 11.1% to $92.8 million due to adoption of ASC 606. Revenues from Platform Solutions decreased 13% to $72.2 million. Software and Services declined 0.7% to $19.6 million and Other categories dropped 41.5% to $1 million.<br /><br />Notably, Product revenues were down owing to the company’s shift to ASC 606 revenue standard that per management resulted in a $3.8 million decline in revenues from the company’s two international MSO software customers.<br /><br />However, management remains optimistic about TiVo Experience 4, which was launched in the fourth quarter and is now available to Pay-TV users. The incorporation of voice recognition with Amazon's (AMZN) Alexa is expected to help it gain further traction in the market. The company notes that its Software and Solutions products are showing great progress in the international market.<br /><br />IP Licensing revenues declined approximately 23.2% year over year to $80.1 million due to fall in revenues from out-of-license settlements and lower revenues from Consumer Electronics Manufacturers.<br /><br />Under the IP Licensing segment, revenues of the U.S. Pay TV Providers declined 28.4% to $49.2 million. New Media, International Pay TV Providers and Other dropped 7% to $21.9 million. Consumer Electronics Manufacturers decreased 25% to $8.9 million due to expiration of license with a customer.<br /><br />The company’s total cost and expenses decreased 5.3% year over year to $121 million on the back of reduced hardware sales and the company’s ongoing cost-reduction efforts.<br /><br />Adjusted EBITDA declined 36% from year-ago quarter to $51.9 million due to lower revenues and higher spend on patent litigation. The company anticipates further increase in IP litigation spends owing to investment in the ongoing Comcast litigation.<br /><br />Non-GAAP pre-tax income was $37.55 million compared with $66.41 million in the same period last year.<br /><br />TiVo exited the reported quarter with cash, cash equivalents and short-term investments of $297.3 million compared with $269.8 million at the end of the previous quarter.</p><p style="text-align: justify;"><em>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.</em></p>

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 11.11% due to these changes.

VGM Scores

Currently, TiVo has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TiVo has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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