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Rovi Corporation Reports First Quarter 2016 Financial Results

today reported financial results for the first quarter ended March 31, 2016.

The Company reported first quarter revenue of $118.4 million, a decrease of 12% compared to $134.0 million in the first quarter of 2015. As expected, revenues were lower than in the comparable period in the prior year, which benefited from higher Service Provider revenues, in part due to having an unnamed top-10 North American Service Provider under license, and higher analog content protection revenues. First quarter 2016 Net loss was $17.7 million, compared to $15.5 million Net loss for the first quarter of 2015. First quarter Diluted loss per share was $0.22, compared to $0.18 Diluted loss per share in the first quarter of 2015.

On a Non-GAAP basis, first quarter Non-GAAP Net Income was $28.1 million, compared to $34.7 million in the first quarter of 2015, and first quarter Non-GAAP Diluted Income Per Share was $0.34, compared to $0.39 in the first quarter of 2015.

Non-GAAP Net Income and Non-GAAP Diluted Income Per Share are defined below in the section entitled “Non-GAAP Information.” Reconciliations between GAAP and Non-GAAP results of operations are provided in the tables below.

“Rovi continued to generate strong Non-GAAP profits in the first quarter and advanced its product portfolio,” said Tom Carson, president and CEO of Rovi. “In the last fifteen months, Rovi successfully renewed IP license agreements with five of the top ten North American service providers, including Frontier Communications which we signed in Q1. We are actively pursuing license renewals with the three remaining unlicensed top ten providers. While we had to file litigation against Comcast in both district court and in the International Trade Commission in order to protect our intellectual property, as well as the interests of other licensees and stakeholders, we are continuing our negotiations with the others and expect to reach agreements this year.”

Business Outlook

There is no change in Rovi’s expectations. Rovi continues to anticipate fiscal year 2016 revenue of $490 million to $520 million and Non-GAAP Diluted Income Per Share of $1.35 to $1.65.

Conference Call Information

Rovi management will host a conference call today, April 29, 2016, at 5:00 a.m. PT/8:00 a.m. ET to discuss the financial results. Investors and analysts interested in participating in the conference are welcome to call 1-866-621-1214 (or international +1-706-643-4013) and reference conference ID 3449304. The conference call can also be accessed via live webcast in the Investor Relations section of Rovi's website at http://www.rovicorp.com/.

A telephonic replay of the conference call will be available through May 6, 2016 and can be accessed by calling 1-800-585-8367 (or international +1-404-537-3406) and entering conference ID 3449304. A replay of the audio webcast will be available on Rovi Corporation's website shortly after the live call ends and will remain on Rovi Corporation's website until its next quarterly earnings call.

Non-GAAP Information

Rovi Corporation provides Non-GAAP information to assist investors in assessing its current and future operations in the way that its management evaluates those operations. Non-GAAP Net Income, Non-GAAP Diluted Income Per Share, Non-GAAP COGS, Non-GAAP Research and Development Expenses, Non-GAAP Selling, General and Administrative Expenses, Non-GAAP Total OpEx, Non-GAAP Total COGS and OpEx and Non-GAAP Interest Expense are supplemental measures of the Company's performance that are not required by, and are not presented in accordance with GAAP. Non-GAAP information is not a substitute for any performance measure derived in accordance with GAAP.

Non-GAAP Net Income is defined as GAAP income (loss) from continuing operations, net of tax, adding back non-cash items such as equity-based compensation, amortization of intangibles, amortization or write-off of note issuance costs, non-cash interest expense recorded on convertible debt under Accounting Standards Codification (“ASC”) 470-20 (formerly known as FSP APB 14-1), mark-to-market fair value adjustments for interest rate swaps; as well as items which impact comparability that are required to be recorded under GAAP, but that the Company believes are not indicative of its core operating results such as changes in the fair value of contingent consideration, gains from the release of Sonic payroll tax withholding liabilities related to a stock option review, transaction, transition and integration costs, contested proxy election costs, restructuring and asset impairment (benefit) charges, payments to note holders and for expenses in connection with the early redemption or modification of debt, gains on sale of strategic investments and discrete income and franchise tax items, including changes in reserves. While depreciation expense is a non-cash item, it is included in Non-GAAP Net Income as a reasonable proxy for capital expenditures.

Non-GAAP Diluted Income Per Share is calculated using Non-GAAP Net Income.

Non-GAAP COGS is defined as GAAP cost of revenues, excluding amortization of intangible assets, excluding equity-based compensation and transition and integration expenses.

Non-GAAP Research and Development Expenses is defined as GAAP research and development expenses excluding equity-based compensation and transition and integration expenses.

Non-GAAP Selling, General and Administrative Expenses is defined as GAAP selling, general and administrative expenses excluding equity-based compensation, contested proxy election costs, changes in the fair value of contingent consideration, changes in franchise tax reserves and transaction, transition and integration expenses.

Non-GAAP Total OpEx is defined as the sum of GAAP research and development and selling, general and administrative expenses, depreciation and gain on sale of patents excluding equity-based compensation, contested proxy election costs, changes in the fair value of contingent consideration, changes in franchise tax reserves and transaction, transition and integration expenses.

Non-GAAP Total COGS and OpEx is defined as GAAP Total Operating costs and expenses, excluding equity-based compensation, contested proxy election costs, changes in the fair value of contingent consideration, changes in franchise tax reserves, amortization of intangible assets, restructuring and asset impairment (benefit) charges, and transaction, transition and integration expenses.

Non-GAAP Interest Expense is defined as GAAP interest expense, excluding amortization or write-off of note issuance costs and non-cash interest expense recorded on convertible debt under Accounting Standards Codification (“ASC”) 470-20 (formerly known as FSP APB 14-1) plus the reclassification of the current period benefit or cost of the interest rate swaps from gain or loss on interest rate swaps.

The Company's management has evaluated and made operating decisions about its business operations primarily based upon Non-GAAP Net Income and Non-GAAP Diluted...


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