TiVo 2007 Annual Report Download - page 53

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Table of Contents
Research and development expenses.
Fiscal Year Ended January 31,
2008 2007 2006
(In thousands, except percentages)
Research and development expenses $ 58,780 $ 50,728 $ 41,087
Change from same prior-year period 16% 23% 9%
Percentage of net revenues 22% 20% 21%
Our research and development expenses consist primarily of employee salaries, related expenses, and consulting expenses. The increase in research and
development expenses in the fiscal year ended January 31, 2008 from the fiscal year ended January 31, 2007 was largely due to an increase of $6.0 million in
headcount related costs associated with an increase in engineering headcount and an increase of $1.5 million in stock-based compensation expenses.
The absolute dollar increase in research and development expenses for fiscal year ended January 31, 2007 from the prior year period was due to an
increase of $7.6 million in headcount related costs associated with an increase in engineering headcount, $5.7 million in additional stock-based compensation
in connection with the adoption of FAS 123R, offset by $6.2 million in engineering expenses allocated to cost of technology revenues.
Sales and marketing expenses.
Fiscal Year Ended January 31,
2008 2007 2006
(In thousands, except percentages)
Sales and marketing expenses $ 23,987 $ 22,520 $ 18,610
Change from same prior-year period 7% 21% 17%
Percentage of net revenues 9% 9% 9%
Sales and marketing expenses consist primarily of employee salaries and related expenses. The increase in sales and marketing expenses in the fiscal
year ended January 31, 2008 was largely related to increased headcount related costs associated with increased advertising sales headcount. The largest
contributor in terms of absolute dollars, to the increased sales and marketing expenses for the fiscal year ended January 31, 2007 from the prior fiscal year,
was an increase in stock-based compensation expense of $1.6 million associated with the adoption of FAS123R.
Sales and marketing, subscription acquisition costs.
Fiscal Year Ended January 31,
2008 2007 2006
(In thousands, except percentages)
Sales and marketing, subscription acquisition costs $ 31,050 $ 20,767 $ 18,641
Change from same prior-year period 50% 11% -13%
Percentage of net revenues 11% 8% 9%
Sales and marketing, subscription acquisition costs include advertising expenses and promotion related expenses directly related to our efforts to
acquire new subscriptions to the TiVo service. The increase from the fiscal year ended January 31, 2007 to January 31, 2008 in sales and marketing,
subscription acquisition costs, was primarily due to our fiscal year 2008 television advertising and online marketing campaign during the first three fiscal
quarters of the year. For the fiscal year ending January 31, 2009, we expect sales and marketing, subscription acquisition costs to decline, as compared to
fiscal year ended January 31, 2008.
The largest contributors in terms of absolute dollars, to the increased sales and marketing, subscription acquisition costs for the fiscal year ended
January 31, 2007 from the prior fiscal year, was advertising expense that increased by 30% or by $5.3 million, offset by decreased spending on other
marketing programs, such as the rewards program.
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