Announcing its fiscal fourth quarter and full year results, TiVo’s interim CEO Naveen Chopra said that the company will adopt a “simplified, pragmatic focus” – a move it expects to improve adjusted EBITDA by US$25-US$35 million this year.
“We will focus on growth in our operator-related businesses; launch a new class of consumer products; and put in place organisational and operational changes that will drive revenues and better manage costs,” said Chopra.
Speaking on the earnings call, the TiVo boss said that the video ecosystem continues to change and shift the role of the traditional cable DVR. As such, “TiVo will need to evolve”.
“Our plan going forward is to invest in our traditional consumer products in a more targeted and focused manner making certain we do not prioritise subscription growth at the expense of profitability,” said Chopra.
“Rather, we will focus our resources on new product innovations that embrace changing consumer behaviour, starting with an entirely new consumer product we expect to launch later this year. We expect this and other new initiatives to be the key source of subscriber growth in our consumer business.”
He stressed that TiVo is “not turning away from the consumer business” but is instead “redirecting” some of its investments.
The comments came a day after Chopra reportedly told staff that TiVo will eliminate roles filled by about 50 full-time TiVo employees and some contractors – changes that were detailed in a memo obtained by Multichannel News.
Speaking on the earnings call, TiVo’s senior vice president, general counsel and chief privacy officer, Matthew Zinn, said that the company’s cost reductions would be focused around R&D areas where “frankly the revenue growth…was not easily identifiable”.
“We are reallocating reserves away from those things and trying to put as much what as we can behind the areas that really are core growth initiatives that support the MSO business, that support international,” said Zinn.
He added that TiVo will cut back on marketing spend for consumer products as, in recent years, growth in subscriptions has not justified continuing that same level of expense.
“We are taking the opportunity to dial back some of the spending in that area and redirect it to core innovation, consumer product innovation, bringing new consumer products to market etc,” said Zinn.
Overall, for the three months ended January 31, 2016, TiVo said its traditional MSO service revenue grew 45% due to factors including strong subscription growth in Spain where Vodafone continued “aggressive bundling” of its TiVo-powered video service.
Total net income for the quarter was US$199,000, which TiVo said included US$12.8 million of CEO transition costs offset by US$7.7 million of related tax benefits. Net revenues came in at US$123 million, up from US$114 a year earlier, following gains in service, software and technology revenues and a decline in hardware revenues.
“We are embarking on a new path to capitalise on the assets we have in place while taking a pragmatic view of our challenges,” said Chopra.
“We believe the opportunities in front of us to increase shareholder value are substantial. We have a unique position in a rapidly evolving video ecosystem, but we are helping operators and others maintain or grow their competitive positions by integrating traditional and OTT content onto any screens and with better navigation.”