TiVo 2009 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2009 TiVo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 159

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159

Table of Contents
Cost of service revenues for the fiscal year ended January 31, 2009 increased $1.6 million as compared to the fiscal year ended January 31, 2008. These
increases are primarily related to increased costs of advertising and audience research expenses associated with our expanded advertising and audience
research measurement product offerings.
Cost of technology revenues.
Twelve Months Ended January 31,
2010 2009 2008
(In thousands, except percentages)
Cost of technology revenues $ 20,703 $ 12,300 $ 17,367
Change from same prior year period 68% -29% 3%
Percentage of technology revenues 69% 61% 90%
Technology gross margin $ 9,204 $ 7,826 $ 2,015
Technology gross margin as a percentage of technology revenues 31% 39% 10%
Cost of technology revenues includes costs associated with our development work primarily for Comcast, DIRECTV, and our international projects.
The increases in costs of technology revenues of $8.4 million are associated with the increase in technology revenues relating to the development work
primarily for Comcast, DIRECTV and our international projects. The increases in technology gross margin of $1.4 million are primarily related to Comcast
development work and our international projects.
Cost of technology revenues decreased by 29% or $5.1 million in the fiscal year ended January 31, 2009 as compared to the fiscal year ended
January 31, 2008. Technology gross margin for the fiscal year ended January 31, 2009 increased by $5.8 million as compared to the fiscal year ended
January 31, 2008. This increase in technology gross margin is primarily related to the Comcast development work and the methodology used to recognize
revenues related to this work. During fiscal year ended January 31, 2008, we recognized revenues and costs for the initial development of TiVo service
software and TiVo Interactive Advertising Management System based on a zero profit model, which resulted in the recognition of equal amounts of revenues
and costs. Additionally during the fiscal year ended January 31, 2008 we recognized $1.1 million of costs for Comcast development work for which no
corresponding revenues were recognized as the Company did not have evidence of an arrangement and the fees for the related development were not fixed.
During the fiscal year ended January 31, 2009, the engineering work performed under the amended August 2007 statement of work for Comcast was
recognized using the percentage-of-completion method.
Cost of hardware revenues.
Twelve Months Ended January 31,
2010 2009 2008
(In thousands, except percentages)
Cost of hardware revenues $ 65,909 $ 57,742 $ 92,052
Change from same prior year period 14% -37% -18%
Percentage of hardware revenues 138% 140% 220%
Hardware gross margin $ (18,002) $ (16,609) $ (50,254)
Hardware gross margin as a percentage of hardware revenue -38% -40% -120%
Costs of hardware revenues include all product costs associated with the TiVo-enabled DVRs we distribute and sell, including manufacturing-related
overhead and personnel, warranty, certain licensing, order fulfillment, and freight costs. We sell this hardware primarily as a means to grow our service
revenues and, as a result, do not intend to generate positive gross margins from these hardware sales. Our costs of hardware sales for the fiscal year ended
January 31, 2010 increased primarily because we sold approximately 42,500 more TiVo units as compared to the same prior year periods.
57