TiVo Inc. (TIVO), the creator of the digital video recorder, recently reported second quarter fiscal year 2010 results. The company delivered improved results compared to its guidance.

TiVo reported a net loss of $2.9 million, better than its previous range of guidance of net loss between $6 million and $8 million. Management expects a net loss in the range of $8 million to $10 million in the third quarter of 2010.

TiVo reported a net loss of 3 cents a share, surpassing the Zacks Consensus Estimate of (5 cents) but fell substantially from the prior-year quarter due to lower subscriptions. The company had reported EPS of 3 cents in the second quarter of 2009.

Net revenue for the reported quarter declined 12.0% year over year to $57.4 million compared to $65.2 million reported in the prior-year quarter.  Net revenue comprises Service Revenue (down 13.9% to $41.5 million), Technology Revenue (up 36.9% to $7.3 million) and Hardware Revenue (dipped 27.1% to $8.5 million).

Service and Technology revenue together declined 8.8% to $48.8 million. For the third quarter of 2010, TiVo expects Service and Technology revenue together in the range of $46 million to $48 million.

TiVo is not immune to the current challenging economic environment, as consumer electronics sales are declining. The company is facing erosion of its subscriber base. The economic downturn has made operations more difficult.

TiVo-owned subscription gross additions for the quarter were 31,000, down 13.9% from 36,000 gross additions in the year-ago quarter. Total TiVo-owned subscriptions declined 6.2% to 1,582,000 in the quarter from 1,686,000 in the prior-year quarter.

The churn in TiVo-owned subscriptions was 73,000 units, leading to net subscription losses of 42,000.  The monthly churn rate was 1.5%, flat compared to the prior-year quarter, whereas TiVo-owned ARPU per month was $7.73 for the quarter under review, down 6.3% from $8.25 in the year ago quarter.

TiVo reported its eighth consecutive quarter of positive adjusted EBITDA of $5.2 million, down by more than 50% from the year-ago quarter due to the fall in Service and Technology revenue and rise in legal expenses. However, it surpassed the guidance of breakeven to $2 million. Adjusted EBITDA is expected to be in the range of ($2) million to breakeven for the third quarter of 2010.

TiVo recently filed a case against AT&T Inc. (T) and Verizon Communications (VZ) for infringement of three patents including TiVo’s ‘Time Warp’ software.

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