TiVo 2009 Annual Report Download - page 60

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Table of Contents
Technology Revenues. Technology revenues for the fiscal year ended January 31, 2010 increased by 49% or $9.8 million as compared to the prior fiscal
year primarily due to higher volume of work for DIRECTV and Comcast.
Technology revenues for the fiscal year ended January 31, 2009 were 4% higher than the technology revenues in the prior fiscal year largely due to new
development work primarily related to our international projects combined with larger Comcast technology revenues.
Hardware Revenues. Hardware revenues, net of allowance for sales returns and net of rebates for the fiscal year ended January 31, 2010, increased by
$6.8 million as compared to the prior fiscal year. The increase in net hardware revenues for the fiscal year ended January 31, 2010 is related to the increase in
the number of units sold during the period as compared to the fiscal year ended January 31, 2009.
Hardware revenues, net of allowance for sales returns and net of rebates for the fiscal year ended January 31, 2009 remained relatively flat at $41.1
million, as compared to $41.8 million in the same prior year period. For the fiscal year ended January 31, 2009, we sold approximately 71,000 fewer TiVo
DVR's than in the same prior year period. These DVRs had a higher average selling price due to the introduction of our TiVo HD DVR, which was not
available until the end of the quarter ended July 31, 2007. Additionally, our rebates and revenue share costs, which are netted against our hardware revenues,
declined during the year as we did not offer rebates on our TiVo HD DVR and we terminated our other rebate programs on August 30, 2008. Although our
hardware revenues have improved we continue to offer revenue share and other hardware subsidies to certain retailers, while our direct sales involve limited
or no subsidies.
Cost of service revenues.
Twelve Months Ended January 31,
2010 2009 2008
(In thousands, except percentages)
Cost of service revenues $ 40,878 $ 44,603 $ 42,976
Change from same prior year period -8% 4% -1%
Percentage of service revenues 26% 24% 20%
Service gross margin $ 118,894 $ 143,805 $ 168,520
Service gross margin as a percentage of service revenues 74% 76% 80%
Costs of service revenues consist primarily of telecommunication and network expenses, employee salaries, service center, credit card processing fees,
and other expenses related to providing the TiVo service. The decrease in cost of service revenues of $3.7 million for the fiscal year ended January 31, 2010
was related to decreased headcount related expenses of $1.3 million and allocated IT expenses of $661,000. As a result of our continued management of
service costs in response to decreases in our subscription base, we also experienced reduced service center expenses of $896,000, telecommunication costs of
$482,000, and bank charges and fees of $644,000 related to credit card service charges.
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