TiVo 2006 Annual Report Download - page 47

Table of Contents
fiscal year ended January 31, 2007. The cost of service and technology revenues for the fiscal year ended January 31, 2007 increased by $25.2 million, or
72%, compared to the prior fiscal year primarily as a result of $16.2 million in technology costs related to Comcast coupled with increased costs associated
with our growing TiVo-Owned subscription base. The cost of hardware revenues for the fiscal year ended January 31, 2007 increased by $25.4 million, or
29%, compared to the prior fiscal year, primarily due to increased hardware shipments related to our introduction of two new DVR models during the year.
Operating Expenses. Our operating expenses, including research and development, sales and marketing, and general and administrative expenses,
increased $24.3 million or 21% during the fiscal year ended January 31, 2007 compared to the prior fiscal year. The largest contributor to the increase in
operating expenses for the fiscal year end January 31, 2007 was non-cash stock compensation expense of $13.2 million, compared to $385,000 in the prior
year. This increase of $12.8 million was largely due to the adoption of Statement of Financial Accounting Standards (SFAS) 123R, "Share-Based Payments".
Cash Flows from Operating Activities. Our cash used in operating activities for the fiscal year ended January 31, 2007 was $33.5 million, as compared
to $3.4 million provided by operating activities for the prior fiscal year. This change in cash flows used in operating activities is largely due to the increase in
our net loss coupled with increased inventory spending and reduction of deferred revenues due to the Company's decision to discontinue general sale of the
product lifetime subscription service.
Key Business Metrics
Management periodically reviews certain key business metrics in order to evaluate our operations, allocate resources, and drive financial performance
in our business. Management monitors these metrics together and not individually as it does not make business decisions based upon any single metric.
Subscriptions. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our relative position in the marketplace
and to forecast future potential service revenues. Below is a table that details the growth in our subscription base during the past eight quarters. The TiVo-
Owned lines refer to subscriptions sold directly by TiVo to consumers who have TiVo-enabled DVRs. The DIRECTV lines refer to subscriptions sold by
DIRECTV to consumers who have integrated DIRECTV satellite receivers with TiVo service. Additionally, we provide a breakdown of the percent of TiVo-
Owned subscriptions for which consumers pay recurring fees, including on a monthly and a prepaid one, two, or three year basis, as opposed to a one-time
prepaid product lifetime fee.
Three Months Ended
(Subscriptions in thousands)
Jan 31,
2007
Oct 31,
2006
July 31,
2006
April 30,
2006
Jan 31,
2006
Oct 31,
2005
Jul 31,
2005
April 30,
2005
TiVo-Owned Subscription Gross Additions: 163 101 74 91 221 92 77 104
Subscription Net Additions:
TiVo-Owned 101 53 30 51 183 55 40 72
DIRECTV -91 -37 -29 2 173 379 214 247
Total Subscription Net Additions 10 16 1 53 356 434 254 319
Cumulative Subscriptions:
TiVo-Owned 1,726 1,625 1,572 1,542 1,491 1,308 1,253 1,213
DIRECTV 2,718 2,809 2,846 2,875 2,873 2,700 2,321 2,107
Total Cumulative Subscriptions 4,444 4,434 4,418 4,417 4,364 4,008 3,574 3,320
Fully Amortized Active Lifetime Subscriptions 165 138 129 122 100 89 83 76
% of TiVo-Owned Cumulative Subscriptions paying recurring fees 58% 55% 53% 52% 51% 51% 51% 51%
We define a "subscription" as a contract referencing a TiVo-enabled DVR for which (i) a consumer has paid for the TiVo service and (ii) service
is not canceled. We previously offered a
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