TiVo 2015 Annual Report Download - page 46

Table of Contents
of the Rovi Entertainment Store business and recording a
$6.8 million impairment charge to the goodwill and intangible assets of the Consumer Website
business as well the loss on disposal of the Rovi Entertainment Store.
Segment Results of Operations
Intellectual Property Licensing Segment
The Intellectual Property Licensing segment's results of operations for the year ended
December 31, 2014 compared to the prior year were as
follows (dollars in thousands):
For the year ended
December 31, 2014 , Intellectual Property Licensing revenue decreased by 3% compared to the prior year due to a 3% increase in
licensing revenue from service providers which was more than offset by a 15% decrease in licensing revenue from CE manufacturers. The increase in
revenue from service providers was due to continued growth in the number of subscribers for which we receive a patent license fee. This increase was
partially off - set by a decline in service provider revenue related to catch - up payments, included in patent license agreements, to make us whole for the pre -
license period of use. The decrease in revenue from CE manufacturers was due to a decline in revenue related to catch - up payments, included in patent
license agreements, to make us whole for the pre - license period of use and a major CE manufacturer being out of contract in 2014.
Intellectual Property Licensing segment Adjusted Operating Expenses increased by 3% during the year ended
December 31, 2014 compared to the
prior year primarily due to a $3.5 million increase in consulting expense related to planning for the upcoming major service provider license renewals and a
$3.2 million increase in employee compensation. These increases were partially offset by a $4.2 million decrease in patent litigation and prosecution costs
and a $0.5 million gain in 2014 from selling a patent.
Product Segment
The Product segment's results of operations for the year ended December 31, 2015 compared to the prior year were as follows (dollars in
thousands):
For the year ended December 31, 2014 , Product segment revenue increased by 5% compared to the prior year due to a 10% increase in revenue
from service providers partially offset by an
18% decrease in CE revenue. The increase in service provider revenue was primarily driven by growth in IPG
product revenue and IPG advertising revenue. Acceptance of our Passport and xD guide products for deployment in multiple countries with a major Latin
American service provider contributed to the IPG product revenue growth. The growth in IPG advertising revenue was partially due to a major Pay TV
provider agreeing to report its advertising sales to us on a monthly basis instead of a quarterly basis. Due to this change we are now recording advertising
revenue related to this pay TV provider on a one month lag instead of a one quarter lag. This change resulted in $3.0 million in additional IPG advertising
revenue being recorded in 2014 for the additional two months of
44
Year Ended December 31,
2014
2013
Change $
Change %
Service Provider
$
200,799
$
194,324
6,475
3
%
Consumer Electronics
84,359
98,886
(14,527
)
(15
)%
Intellectual Property Licensing Revenues
285,158
293,210
(8,052
)
(3
)%
Adjusted Operating Expenses
59,810
57,957
1,853
3
%
Adjusted EBITDA
$
225,348
$
235,253
(9,905
)
(4
)%
Adjusted EBITDA Margin
79.0
%
80.2
%
Year Ended December 31,
2014
2013
Change $
Change %
Service Provider
$
204,877
$
187,065
17,812
10
%
Consumer Electronics
22,342
27,262
(4,920
)
(18
)%
Other
29,934
29,853
81
—
%
Product Revenues
257,153
244,180
12,973
5
%
Adjusted Operating Expenses
197,405
186,787
10,618
6
%
Adjusted EBITDA
$
59,748
$
57,393
2,355
4
%
Adjusted EBITDA Margin
23.2
%
23.5
%