Yahoo Finance

Robert Andersen

Thanks, Jon. As usual, I'll be covering two main areas during this call. I'll first go through the financial results and provide commentary for the quarter. And second, I'll discuss our financial outlook.
Let me begin with the quarter's results. Total revenue for the first quarter was $114 million, a decrease of 4% from last year's $119 million, and lower by 2% when adjusting for the perceived divestiture. Pay-TV, our largest revenue category, posted $50 million in the quarter, a decrease of 12% as strong growth in IPTV, which was up 25%, was more than offset by a decrease in our core Pay-TV business, partly due to certain minimum guarantee revenue that occurred last year.
Consumer electronics was $23 million, a decrease of 5% when excluding the divestiture of perceived. The reduction was primarily due to lower revenue on softer production volume of certain consumer electronics products. Connected car rose 37% to finish at $33 million. The significant growth was primarily due to minimum guarantee licensing arrangements for HD radio that occurred during the quarter, partially offset by lower automotive volumes utilizing HD radio and audio-based solutions.
Media platform at $8 million was lower than last year by 30%, due primarily to lower middleware revenue associated with a license agreement and audit settlement that occurred last year, along with a time shift of certain advertising commitments year over year. We expect these commitments to be fulfilled later this year.
Moving to the income statement. Our non-GAAP adjusted operating expense for the quarter was $76 million, an improvement of $15 million or 17% from the prior year. Approximately 80% of this expense improvement is savings from business optimization efforts, and the remaining 20% is from business divestitures.
Our adjusted EBITDA was $16 million, resulting in an adjusted EBITDA margin of 14%. Notably, we more than tripled adjusted EBITDA year over year and expanded the adjusted EBITDA margin rate by over 900 basis points. Achieving a 14% margin in a seasonally weaker quarter demonstrates significant progress toward our full-year goal of 16% to 18% adjusted EBITDA margin. Our non-GAAP earnings per share was $0.16, a $0.21 increase from last year's $0.05 loss per share.
Moving to the balance sheet, the company entered the quarter with $88 million of cash and cash equivalents, a decrease from the fourth quarter of 2024 due to $22 million of operating cash usage, $4 million of investing activities, and $16 million of financing activities.
In late February, we completed the financing arrangement with PNC Bank for a $55 million line of credit. This line is backed by our accounts receivable assets for which we retired $10 million of our prior debt and refinanced the remaining $40 million under the new line of credit. This line has a three-year term and our current borrowing rate is one month SOFR plus 190 basis points.
Operating cash in the quarter was a usage of $22 million due primarily to the pay down of accrued liabilities of $15 million principally for bonus amounts for fiscal year 2024 and from an increase in unbilled contract receivables related to minimum guarantee contract arrangements within the connected car category. Notably, operating cash improved by $28 million compared to Q1 of last year.
With regard to our financial outlook, despite various macroeconomic uncertainties, we are maintaining our outlook for the year. Thus far, the impact of tariffs on our business appears to be modest and within the range of planning outcomes set for the year. We will continue to monitor if any changes in outlook are warranted as new information becomes available.
That concludes our prepared remarks. Let's now open the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Hamed Khorsand, BWS.

Hamed Khorsand

So starting off with the IPTV and the user base, it's now at 2.75 million, but it sounds like you also added a lot more service providers. So assuming that you get to 3 million soon, what's the timeframe as far as monetizing that and getting to a higher baseline revenue. What will it take?

Jon Kirchner

Well, I think there's kind of a continued quarter over quarter effort to assist with deployments and more wins that ultimately will drive subscribership revenue. I'm not sure what specifically, Thomas, you're seeking to answer other than I think you'll see those improvements play out through the year and obviously, consequent revenue increases. think simultaneously,
Some of the video-over-broadband wins, at the end of the day, are less about subscription revenue as they are about the longer tail of monetization that can happen on the platform. And as we talked about, this is an area where we're starting and have begun to roll out various code updates that will enable us to bring a more robust kind of ad platform onto those set-top boxes and that will in turn begin to yield monetization revenue that comes in parallel with what we're doing on smart TVs.

Hamed Khorsand

I guess I'm trying to get to, do you have the manpower and capacity to handle that 50% increase in the number of IPTV customers quarter on quarter?

Jon Kirchner

Well, it's not necessarily up 50%. I'm not sure where you got that number. Last quarter you guys said it was 20 customers. Now you're saying it's 30 customers.
Oh, in the sheer numbers. Not all those deployments will happen immediately and simultaneously. They all have separate schedules under which they'll roll out. But in short, yes, we're staging and working with those customers to make sure not only we can handle it, but ultimately they come online.

Hamed Khorsand

Okay, and then my final question was going to be about cash flow. Is there a specific quarter we would see the group of company have a positive cash flow that you're guiding to? Is it all happening in Q4?

Robert Andersen

No, it's not all completely back-end weighted. Q1 is seasonally our weakest quarter because we paid deferred liabilities related to last year. But you'll see that pretty much any year for us. Given that we've guided to be positive for the year, think you're going to expect the balance of the year to be in positive category, certainly in a second.

Operator

(Operator Instructions) Matt Galinko, Maxim Group.

Matt Galinko

Just not sure if I missed it in the prepared remarks, but did you or can you speak to any additional OEMs in the pipeline for for TV companies?

Jon Kirchner

We didn't necessarily call it out specifically in the script, but broadly speaking, we expect to add at least one to two TV partners in the course of this year beyond the eight we already have.

Matt Galinko

Got it. And any changes to kind of the number of active users that you're targeting by end of year or any just changes to that schedule? And maybe can you maybe share a little bit more color around, whether tariffs have any influence or potential to influence the targets you set for number of active users?

Jon Kirchner

Sure. So we have talked about looking to exit the year with 5 million monthly active users. I think we are very much on track. I think stepping back, as we talked about, by the time we exit next year, we expect to be at least that 7 million number or better. I think that very much is on track based on all the planning and production activity and the partners that we have.
To what extent tariffs will ultimately impact things? Obviously, they create a pretty fluid environment where there's a bit lower visibility and how that ultimately flows through. There's obviously some portion of the TV volume is manufactured in Asia, might be subject to tariffs. But depending on how the tariffs come down and where final assembly and other things happen in various markets, we may or may not be meaningfully impacted by that.
At this point, I think we're not hearing anything that would indicate that there's anything about that plan that is that is diverted meaningfully from what we've expected and will continue to stay close to it. Obviously should anything change.

Operator

Jason Kreyer, Craig Hallum.

This is Cal on for Jason. And apologies if any of this has been addressed. But I caught the last end there talking about the tariffs. But can you just kind of talk about what kind of macro factors you're contemplating in the guide?

Jon Kirchner

Well, I think we're at this point, we're maintaining the guide that previously provided in part because while there are various uncertainties we see out there, it's not yet clear that that is going to impact how we think about the range we provided for this year and so I think as always, as we set plans and our guidance ranges, we often and very intentionally ensure there's a lot of different ways to get within the range.
So as we sit here at this point, I think we are comfortable where we are. We'll obviously watch it very closely as we go ahead. But we're busy executing even in a world that has a certain amount of fluidity. And as I said, I think we've had some very, very strong execution as it relates to Q1.

Great. And then maybe just kind of pivoting over to the TiVo OS, you talked a little bit about the new TiVo One, the home page unit that you're rolling out here. So just curious the opportunity that you see there to potentially accelerate your ARPU growth with these more flagship units.

Jon Kirchner

Well, I think there's a couple of things going on. First of all, that homepage ad unit is a very, very valuable piece of real estate said simply. And it's one that obviously advertisers have a strong interest in. our ability to roll out that ad unit across our platform of not only smart TVs, but ultimately as we begin to roll it out across our broader IPTV video over broadband footprint where we know there is a lot of very active viewership, obviously puts us in a position to begin to turn that monetization wheel better.
And I think we've done a lot of work to to make sure these updates can successfully roll out and land on devices. And then as we said, we're doing various pilots to ensure that all is going well. So I think it will have a positive impact on what we're doing. think we've long planned for this to be part of the mix.
So it's not something that came out of the blue that we're just adding. But this is part of our strategy of ultimately trying to over that longer arc, accelerate more and better monetization and offer more compelling ad products to our advertiser partners.

Great. And then if I could just followed with one more. Just curious if you have any sort of incremental updates on the US TiVo OS devices as these rollouts continue to progress.
Obviously still early days is as you know the sharp volumes are naturally small. We expect more TVs with an additional partner to hit the market as we go through the balance of this year and then coupled with that we have active update programs going on with respect to these set-top box video or broadband devices. And so as we think about US footprint, it really is going to be the combination of these two things as we move into the back half and begin to see that scale reach the point where it's of more interest to advertisers and we can begin to drive monetization in an ever kind of increasing fashion.

Operator

There are no further questions at this time, so I'd like to turn the call back over to CEO, Jon Kirchner, for closing remarks.

Jon Kirchner

Thank you, Amy. Thanks everyone for joining today's call. We're pleased with the milestones we continue to achieve to support the long term revenue growth we expect to generate through media platform, video over broadband and connected car. I'd like to thank our customers and broad ecosystem of partners for their continued support.
I'd also like to thank our employees for their hard work toward realizing our strategic and financial goals. We look forward to reviewing our Q2 results with you in August. Operator, this concludes today's call.

Operator

Thank you so much. This concludes today's conference call. You may now disconnect.