TiVo's Strong Revenue Growth Results in Significant Progress on Path to Profitability

TiVo's Strong Revenue Growth Results in Significant Progress on Path to Profitability

Announces Results for the First Quarter FY-2006

- Service and technology revenue grew to $40.0 million, up 59% on Q1 FY-2005 and a 17% increase on Q4;

- Gross margin grew to $22.4 million, up 121% on Q1 FY-2005;

- Subscription base more than doubled in last twelve months to over 3.3 million;

- Comcast agreement greatly expands future available market for TiVo rollout

ALVISO, Calif., May 26 /PRNewswire-FirstCall/ -- TiVo Inc. (NASDAQ:TIVO), the creator of and a leader in television services for digital video recorders (DVRs), today reported financial results for the first quarter ended April 30, 2005.

Service and technology revenues for the quarter increased 59% to $40.0 million, compared with $25.2 million for the same period last year. TiVo's net loss improved significantly year-on-year; Q1 net loss was ($0.9) million, or ($0.01) per share, compared to a net loss of ($9.1) million, or ($0.11) per share, for the three months ended April 30, 2004.

Total subscriptions reached more than 3.3 million, with the addition of 319,000 total net new subscriptions in the quarter. The installed base of DIRECTV subscriptions is now approximately 2.1 million with the addition of 247,000 net new subscriptions in the quarter; while the installed base of TiVo-Owned subscriptions grew by 72,000 in Q1 to a level of over 1.2 million.

Mike Ramsay, TiVo's Chairman and CEO, commented: "This quarter's combination of solid revenue growth and gross margin improvement is driving the Company towards our goal of profitability. We are pleased to see last year's focus and investment in subscription growth continue to pay off, resulting in revenue growth now coming through to the bottom line."

"We were excited to announce our strategic partnership with Comcast," Ramsay continued. "This new relationship presents us with tremendous opportunities, as it greatly expands the available market for TiVo's unmatched DVR features and innovative advertising platform. Our Comcast and DIRECTV advertising agreements reinforce our position as the technology standard for service providers and this area will be the primary outlet for developing our advertising business. To take advantage of this mass deployment opportunity, we have increased our investment in technology development to ensure that Comcast can deploy TiVo to its customers as fast as possible."

Q1'06 Operational Highlights

TiVo and Comcast Sign Multi-Year Strategic Partnership

In the quarter, TiVo and Comcast, the nation's largest cable provider, with 21.5 million cable subscribers, announced a multi-year strategic partnership to develop a version of the TiVo service for Comcast. New software will be developed by TiVo and will be incorporated into Comcast's digital set top box platforms. The new service will be marketed with the TiVo brand, and is expected to be available on Comcast's DVR products in a majority of Comcast markets in mid-to-late 2006.

Advertising Platform Gains Momentum with New Service Agreements

In March, TiVo announced the signing of a new advertising services agreement with DIRECTV, extending the companies' prior services agreement. Under the new agreement, each company may sell and distribute TiVo's advanced advertising capabilities on DIRECTV DVRs with TiVo service.

In addition, as Comcast announced earlier in the quarter, it intends to deploy TiVo's innovative advertising platform on Comcast's existing DVR platforms in the future as well.

Dave Courtney, Executive Vice President, explained: "We plan to accelerate the deployment of our advertising technology through relationships with key service providers. These agreements illustrate the promise of this technology to enhance the effectiveness of television advertising as the demand for new and innovative ways to reach consumers grows. We look forward to working with our partners to develop this capability to its full potential."

Intellectual Property Portfolio Grows

In March, the Company announced that it had been granted 8 new domestic and foreign patents covering important aspects of DVR software and hardware design. Now with 85 granted domestic and foreign patents, and 117 domestic and foreign patent applications pending, TiVo continues to be a leader, placing strategic emphasis on developing, licensing and protecting the Company's intellectual property.

Company Advances Next-Generation Service Strategy

Advancing its strategy to become the user interface for the digital living room, TiVo has continued to aggressively develop in this area to further differentiate the TiVo experience from generic cable and satellite DVR systems. Earlier this year, TiVo unveiled its next-generation service strategy that will allow subscribers to view content from Internet-based services. In addition, the Company launched its TiVoToGo(TM) service enhancement, allowing subscribers to securely transfer their favorite shows from a TiVo box to a laptop or portable media player so that they can take their favorite shows with them on business travel or family road trips. TiVo also continues to lead improvements in the consumer entertainment experience with TiVo desktop software 2.1, which allows consumers to integrate music, photos and video into their TiVo experience.

Management Provides Guidance for the Second Quarter

Second Quarter Management Guidance Quarter ending
(in millions, except subscription numbers) July 31, 2005

Service and Technology Revenues $39.8 - $40.6
Rebates, Revenue Share and Other Payments to Channel $(4.1) - $(4.5)
Cost of Service and Technology Revenues $(9.7) - $(10.0)
Hardware Gross Margin $(2.7) - $(3.7)
Gross Margin $22.0 - $23.7
Net Loss $(4.0) - $(6.0)

TiVo-Owned Subscription Net Additions 40,000 - 60,000
DIRECTV Subscription Net Additions 160,000 - 200,000
Total Subscription Net Additions 200,000 - 260,000

Management Updates Annual Guidance

Management guidance for net loss for the year has narrowed to a range of $10.0 million to $20.0 million. Management guidance for annual service and technology revenues remains in the range of $155.0 million to $165.0 million in the year. Management also previously provided guidance that it expects to reach profitability by the fourth quarter.

Conference Call and Web Cast

TiVo will host a conference call to discuss first quarter financial and operating results at 2:00 pm PT (5:00 pm ET), today, May 26, 2005. To listen to the discussion, please visit www.tivo.com/ir and click on the link provided for the webcast conference call or dial 800-289-0569 and use the password 8204556. The web cast will be archived and available through June 2, 2005 at www.tivo.com/ir or by calling 719-457-0820 and entering the conference ID number 8204556.

About TiVo Inc.

Founded in 1997, TiVo Inc., a pioneer in home entertainment, created a brand new category of products with the development of the first digital video recorder (DVR). Today, the Company continues to revolutionize the way consumers watch and access home entertainment by making TiVo the focal point of the digital living room, a center for sharing and experiencing television, music, photos, and other content. TiVo connects consumers to the digital entertainment they want, where and when they want it. The Company is based in Alviso, Calif.

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, TiVo's business, services, business development, strategy, customers, the expected future deployment and availability of the TiVo service and related advertising features to Comcast customers and other factors that may affect future earnings or financial results. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "believe," "expect," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in development, competitive service offerings and lack of market acceptance, as well as the "Factors That May Affect Future Operating Results" included from time to time in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2005, filed with the Securities and Exchange Commission. We caution you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo disclaims any obligation to update these forward-looking statements.

TiVo and the TiVo Logo are registered trademarks of TiVo Inc. in the United States and other jurisdictions. TiVoToGo is a trademark of TiVo Inc. All rights reserved.

TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended
April 30, 2005 April 30, 2004

Service revenues $38,344 $22,159
Technology revenues 1,676 3,015
Service and Technology revenues 40,020 25,174

Hardware sales 10,526 14,337
Rebates, rev share & other pmts to channel (3,638) (4,988)
Net revenues 46,908 34,523

Cost of service revenues 8,639 5,593
Cost of technology revenues 227 1,962
Cost of hardware sales 15,642 16,850
Gross margin 22,400 10,118

Research and development 10,904 8,999
Sales and marketing 6,830 5,600
General and administrative 6,138 4,239
Loss from operations (1,472) (8,720)

Interest and other income (expense), net 623 (329)
Provision for taxes (8) (18)
Net loss attributable to common stockholders $(857) $(9,067)

Net loss per common share - basic and diluted $(0.01) $(0.11)
Weighted average common shares used to
calculate basic & diluted 82,381 79,800

TIVO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

As of April 30, 2005 As of January 31, 2005

Assets
Cash, cash equivalents and
short-term investments $105,491 $106,345
Accounts receivable, net 8,128 25,879
Inventories 18,983 12,103
Prepaid expenses and other 4,650 5,714
Intangible, property and
equipment, net 13,262 10,011
Total assets $150,514 $160,052

Liabilities & stockholders' deficit
Line of Credit $6,000 $4,500
Accounts payable and other
liabilities 35,691 53,096
Deferred revenue 109,936 105,148
Total stockholders' deficit (1,113) (2,692)
Liabilities & stockholders' deficit $150,514 $160,052

TIVO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Three months ended
April 30, 2005 April 30, 2004

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to common
stockholders $(857) $(9,067)
Non-cash adjustments to reconcile net loss
to net cash provided by operating
activities: 1,369 1,985
Changes in operating assets and liabilities:
Working capital (5,491) (314)
Long-term prepaid assets and liabilities 21 664
Deferred revenue 4,788 392
Net cash provided by (used in) operating
activities (170) (6,340)

Acquisition of property and equipment and
intangibles, net (4,678) (750)
Purchases and Sales and maturities of
marketable securities, net 4,400 (10,400)
Net cash used in investing activities (278) (11,150)

Net cash provided by financing activities 3,994 2,215

NET CHANGE IN CASH AND CASH EQUIVALENTS
Balance at beginning of period 87,245 138,210
Balance at end of period 90,791 122,935
Net increase (decrease) in cash $3,546 $(15,275)

TIVO INC.
OTHER DATA

Subscriptions

Three Months Ended
(Subscriptions in thousands) April 30, 2005 April 30, 2004

TiVo-Owned 72 68
DIRECTV 247 196
Total Subscriptions Net Additions 319 264

TiVo-Owned 1,213 724
DIRECTV 2,107 872
Total Cumulative Subscriptions 3,320 1,596

% of TiVo -Owned Subscriptions paying
recurring fees 51% 42%

Included in the 3,320,000 subscriptions are approximately 76,000 lifetime subscriptions that have reached the end of the 48-month period TiVo uses to recognize lifetime subscription revenue. These lifetime subscriptions no longer generate subscription revenue.

TIVO INC.
OTHER DATA - KEY BUSINESS METRICS

Three Months Ended
April 30, 2005 April 30, 2004
TiVo-Owned Churn Rate (In thousands)

Average TiVo-Owned subscriptions (for the
quarter) 1,180 691
TiVo-Owned subscription cancellations (for
the quarter) (32) (14)
TiVo-Owned Churn Rate per month -0.9% -0.7%

TiVo-Owned Churn Rate. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our ability to retain existing subscribers by providing compelling services that are competitive in the market. We define the TiVo-Owned Churn Rate as the average TiVo-Owned subscription (including both monthly and product lifetime subscriptions) cancellations per month in the period divided by the average of TiVo-Owned subscriptions for the period. We calculate average subscriptions by adding the average subscriptions for each month and dividing by the number of months in the period. We calculate average subscriptions for each month by adding the beginning and ending subscriptions for the month and dividing by two. We are not aware of any uniform standards for calculating churn and caution that our presentation may not be consistent with that of other companies.

Three Months Ended Twelve Months Ended
April 30, April 30, April 30, April 30,
Subscription Acquisition Cost 2005 2004 2005 2004
(In thousands, except SAC)

Sales and marketing expenses $6,830 $5,600 $38,597 $20,548
Rebates, revenue share, and
other payments to channel 3,638 4,988 53,346 11,790
Hardware revenues (10,526) (14,337) (107,464) (72,410)
Cost of hardware revenues 15,642 16,850 119,115 77,508
Total Acquisition Costs 15,584 13,101 103,594 37,436
TiVo-Owned Subscription Gross
Additions 104 82 576 323
Subscription Acquisition Cost (SAC) $150 $160 $180 $116

Subscription Acquisition Cost ("SAC"). Management reviews this metric, and believes it may be useful to investors, in order to evaluate trends in the efficiency of our marketing programs and subscription acquisition strategies. As a result of the seasonal nature of our subscription growth, our SAC varies significantly during the year. Management primarily reviews this metric on an annual basis due to the timing difference between our recognition of promotional program expense and the subsequent addition of the related subscription acquisition. Accordingly, we are presenting SAC on a trailing twelve months basis as well in order to show SAC over the longer-term. We do not include DIRECTV subscription gross additions in our calculation of SAC because we incur limited or no acquisition costs for new DIRECTV subscriptions. We are not aware of any uniform standards for calculating total acquisition costs or SAC and caution that our presentation may not be consistent with that of other companies.

Three Months Ended
April 30, April 30,
TiVo-Owned Average Revenue per Subscription 2005 2004
(In thousands, except ARPU)

Service and Technology revenues $40,020 $25,174
Less: Technology revenues (1,676) (3,015)
Total Service revenues 38,344 22,159
Less: DIRECTV-related service revenues (7,099) (3,815)
TiVo-Owned-related service revenues 31,245 18,344
Average TiVo-Owned revenues per month 10,415 6,115
Average TiVo-Owned per month subscriptions 1,180 691
TiVo-Owned ARPU per month $8.83 $8.85

Three Months Ended
April 30, April 30,
DIRECTV Average Revenue per Subscription 2005 2004
(In thousands, except ARPU)
Service and Technology revenues $40,020 $25,174
Less: Technology revenues (1,676) (3,015)
Total Service revenues 38,344 22,159
Less: TiVo-Owned-related service revenues (31,245) (18,344)
DIRECTV-related service revenues 7,099 3,815
Average DIRECTV revenues per month 2,366 1,272
Average DIRECTV per month subscriptions 1,994 770
DIRECTV ARPU per month $1.19 $1.65

Average Revenue Per Subscription ("ARPU"). Management reviews this metric, and believes it may be useful to investors, in order to evaluate the potential of our subscription base to generate revenues from a variety of sources, including subscription fees, advertising, and audience measurement research. ARPU does not include rebates, revenue share and other payments to channel that reduce our GAAP revenues, and as a result you should not use ARPU as a substitute for measures of financial performance calculated in accordance with GAAP. Management believes it is useful to consider this metric excluding the costs associated with rebates, revenue share and other payments to channel because of the discretionary nature of these expenses and because management believes these expenses are more appropriately monitored as part of SAC. We are not aware of any uniform standards for calculating ARPU and caution that our presentation may not be consistent with that of other companies.

The decrease in ARPU per month for DIRECTV is the result of the large addition of new DIRECTV subscriptions. While these more recent DIRECTV subscription additions offer lower recurring revenues than subscriptions added during earlier phases of our DIRECTV relationship, they result in more attractive percent margins in our financial results because they generally involve limited or no acquisition costs and lower recurring expenses.

Source: TiVo Inc.

CONTACT: Investor Relations, Ed Lockwood, +1-408-519-9345 or
ir@tivo.com, or, Media Relations, David Shane, +1-408-519-9245 or
dshane@tivo.com, both of TiVo Inc.

Web site: http://www.tivo.com/

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