TiVo 2003 Annual Report Download - page 25

Table of Contents
• Hardware Revenues. Hardware revenues for the fiscal year ended January 31, 2004 were approximately 60% greater than the prior fiscal year
period due to increased volume in TiVo-enabled DVRs sold to retailers and consumers. Hardware revenues for the fiscal year ended January 31,
2003 was $45.6 million compared to zero for the fiscal year ended January 31, 2002. For the fiscal years ended January 31, 2004 and 2003, one
retail customer generated $28.3 million and $22.7 million of hardware revenues, or 19% and 21% of total revenues, respectively.
Rebates, revenue share, and other payments to channel.
Fiscal Year Ended January 31,
2004 2003 2002
(In thousands, except percentages)
Rebates, revenue share, and other payments to channel $ 9,159 $ 9,780 $ —
Change from prior fiscal year -6% 100% —
We recognize certain marketing-related payments as a reduction of revenues on our statements of operations. Rebates, revenue share, and other
payments to channel decreased for the fiscal year ended January 31, 2004 as compared to the respective prior fiscal year due to lower revenue share and
market development funds paid to retailers. Consumer rebate expenses were $3.8 million and $4.4 million, respectively, for fiscal years ended January 31,
2004 and 2003. We expect our fiscal year 2005 payments to be higher due to our planned increased investment in subscription acquisition activities.
Cost of service and technology revenues.
Fiscal Year Ended January 31,
2004
2003 2002
(In thousands, except percentages)
Cost of service revenues $ 17,705 $ 17,119 $ 19,852
Cost of technology revenues 13,609 8,033 62
Cost of service and technology revenues $ 31,314 $ 25,152 $ 19,914
Change from prior fiscal year 24% 26% 6%
Percentage of net revenues 22% 26% NM
Costs of service and technology revenues consist primarily of expenses related to providing engineering professional services to our customers,
including employee salaries and related costs, as well as prototyping and other material costs. Additional expenses included are telecommunication and
network expenses, employee salaries, call center, and other expenses related to providing the TiVo service. Cost of service revenues for the fiscal year ended
January 31, 2004 increased modestly compared to the prior fiscal year. Total salaries and benefits for the fiscal year ended January 31, 2004 increased by 37%
compared to the prior fiscal year due to an increased level of staffing. This increase was offset by a decrease in telecommunications and network expenses of
30%, or over $1.3 million, for the fiscal year ended January 31, 2004. This decrease was a result of continued reduction of the service cost per subscription
including using satellite transmission of the TiVo service for subscribers using the DIRECTV Receiver with TiVo. Cost of technology revenues increased by
approximately 69% or $5.6 million for the fiscal year ended January 31, 2004 as compared to the prior fiscal year. This increase was due to increased
expenses related to providing engineering professional services to two customers under agreements for which expenses exceeded the budgeted revenues.
Cost of hardware revenues.
Fiscal Year Ended January 31,
2004 2003 2002
(In thousands, except percentages)
Cost of hardware revenues $ 74,836 $ 44,647 $ —
Change from prior fiscal year 68% NM —
Percentage of net revenues 53% 47% —
Percentage of hardware revenues 103% 98% —
24