The company, whose stock had fallen about 12 percent in the past month amid concerns that its growth prospects are limited, also posted a narrow second-quarter net profit and was break-even on a per-share basis as it cut the cost of gaining subscribers.
But additions to its fee-based TV recording service fell to 254,000 subscribers from 288,000 in the same quarter one year ago. Key to that drop was a 5 percent decline in new customers from DirecTV, its biggest source of new customers, which has said it plans to cease marketing TiVo's product.
Alviso, Calif.-based TiVo also said it had decided toand would forgo reaching its goal of sustainable profitability by the fourth quarter.
The company reported a net profit attributable to common shareholders of $249,000, or nil cents a share, for the quarter ended in July, from a net loss of $10.8 million, or 13 cents a share a year earlier.
TiVo, whose DVR service lets users pause live TV and save massive amounts of programming, also said service and technology revenues for the quarter increased 46 percent to $40.7 million. Factoring in the cost of hardware sales, net revenue slipped to $39.3 million from $39.8 million.
Analysts, on average, expected a loss of 4 cents a share, according to Reuters Estimates.
Shares of TiVo rose 27 cents, or 4.6 percent, to $6.12 in early trading on Thursday.
Analysts confused by shift
Analysts on a conference call took the company to task for repeatedly shifting its strategy, which in recent years has shifted from heavy spending to to trimming costs to turn a profit, and now back to an aggressive marketing push.
"It appears to me that there is no focus," said analyst Alan Bezoza, of Friedman Billings Ramsey, on the call.
In response, TiVo Chief Executive Tom Rogers, who was named to the position in June, said the company's core focus is to drive subscriber growth by building distribution and beefing up sales of its standalone set-top box.
"As we grow that scale, we believe there is a growing opportunity for us to monetize that scale with advertising revenue, creating a dual-stream revenue business in addition to a third stream, which is technology revenues from our (technology) portfolio," he said.
Ironically, the company said that even though it will, it may not have enough inventory on hand to meet greater demand. As a result, subscription additions through the end of this year will be lower than last year.
In the second quarter, "TiVo-owned" customers--more-profitable users whom the company gains outside of its partnership with satellite TV provider DirecTV--rose by 40,000. In all, TiVo ended the quarter at 3.6 million subscribers.
For the third quarter, TiVo expects service and technology revenues in the range of $41 million to $43 million and a net loss of $20 million to $25 million.
Analyst April Horace of Hoefer & Arnett said Rogers was frank about TiVo's flagging relationship with DirecTV, but said he failed to convince her of how TiVo's system is going to reach a mass audience even as it bleeds cash.
"I found his message to be very confusing," she said.
Separately, Cablevision Systems said on Wednesday it agreed to test market digital video recorders from TiVo along with wireless network capability.
Cablevision said the offering would provide satellite customers who sign up for multiple services with a broadband link without the need for a telephone line. The test, which will be bolstered by a targeted marketing campaign, begins in October and will last through the end of the year.