OpenTV Reports First Quarter Results

OpenTV Reports First Quarter Results

SAN FRANCISCO, May 8 /PRNewswire-FirstCall/ -- OpenTV (NASDAQ:OPTV) , a leading provider of solutions for the delivery of advanced digital television and cross platform interactive services, today announced financial results for its first quarter ended March 31, 2007.

"Our first quarter results were driven by solid revenue growth in our Middleware and Applications segments," said OpenTV's Chief Executive Officer, Alan Guggenheim. "We continue to focus on execution and leveraging our market-leading positions to generate sustainable revenue growth and profitability over the long-term. Our mission is to be the leading provider of end-to-end solutions for the delivery of convergent media experiences, and we will continue to pursue the many growth opportunities before us with a managed global vision."

Key Operating Measures

   USD Millions       Three months ended  Three months ended      Change                        March 31, 2007      March 31, 2006    Revenues                $26.4m            $24.9m                 6 %   Adjusted EBITDA,        $0.3m              $0.8m              $(0.5)m    before unusual    items   Cash, Cash              $71.8m            $61.6m                17 %    Equivalents and    Marketable Debt    Securities     First Quarter 2007  

For the quarter ended March 31, 2007, revenues were $26.4 million, an increase of 6% over revenues of $24.9 million for the first quarter of 2006. Royalties and licenses revenues increased 9% to $17.9 million. Services and other revenues remained the same as in the prior year quarter at $8.5 million. Adjusted EBITDA, before unusual items, was $0.3 million for the quarter ended March 31, 2007, compared to $0.8 million for the first quarter of 2006. Adjusted EBITDA, before unusual items, is a non-GAAP financial measure. Reconciliations of the differences between this non-GAAP financial measure and net loss, which is the most directly comparable GAAP financial measure, are included at the end of this press release. Additional information regarding the derivation of Adjusted EBITDA and a statement of the relevance to management of this information and its possible usefulness to investors is also included at the end of this release.

Net loss for the first quarter of 2007 was $3.1 million, or $(0.02) per share, which is the same as the first quarter of 2006.

As of March 31, 2007, the Company had $31.4 million in deferred revenue, compared with $25.6 million at the end of 2006.

As of March 31, 2007, the Company had cash, cash equivalents and short and long-term marketable debt securities totaling $71.8 million compared to $65.2 million as of December 31, 2006.

   Segment Information  (year-over-year comparisons)    Revenues   -- Middleware and Integrated Technologies revenues increased by 10% to      $21.7 million, compared to $19.8 million.   -- Applications revenues increased by 7% to $4.4 million, compared to $4.1      million.   -- BettingCorp revenues decreased by 70% to $0.3 million, compared to $1.0      million.    Contribution Margin   -- Middleware and Integrated Technologies contribution margin decreased by      $1.0 million to $6.7 million, compared to $7.7 million in the year-ago      quarter resulting from increased headcount and headcount-related costs,      and consulting and subcontractor costs, which were due to our continued      investment in this segment.   -- Applications contribution margin improved by $0.9 million to $0.1      million, compared to a loss of $0.8 million.   -- BettingCorp contribution margin decreased by $0.1 million to a loss of      $0.9 million, compared to a loss of $0.8 million.   

For the first quarter of 2007, total contribution margin from the Company's operating segments decreased to $5.9 million, compared to $6.1 million in the first quarter of 2006. Unallocated corporate overhead was $5.6 million in the first quarter of 2007, $0.3 million higher than unallocated corporate overhead of $5.3 million in the first quarter of 2006.

Conference Call Details

OpenTV will conduct a conference call to discuss the Company's first quarter financial results. The details of the call are as follows:

   Date and Time:            Tuesday, May 8, 2007 at 5 p.m. ET / 2 p.m. PT   Dial-in Number US:        866-578-5771   Dial-in Number   International:            617-213-8055   Pass Code:                59363948   Replay Number US:         888-286-8010   Replay Number   International:            617-801-6888   Pass Code:                41156214   

The conference call replay will be available from Tuesday, May 8 at 7 p.m. ET / 4 p.m. PT through Tuesday, May 15 until 7 p.m. ET / 4 p.m. PT. To access a live webcast of the conference call, please go to the Investor Relations section of the OpenTV Web site at www.opentv.com.

About Segment Information

Because our business segments reflect the manner in which management reviews our business, they necessarily involve judgments that management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified from time to time to reflect technologies and applications that are newly created or that have changed, or other business conditions that evolve, each of which may result in management reassessing specific segments, the elements included therein and the methodologies used to assess segment performance.

In addition to reviewing the company's business segments by revenues, management also reviews and assesses the "contribution margin" of each of these segments, which is a non- GAAP financial measure.

Non-GAAP Financial Measures

"EBITDA" is an acronym for earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA, as used in this release, removes from EBITDA the effects of amortization of intangible assets, share-based compensation expense, other income and expense, and minority interest. "Adjusted EBITDA before unusual items" removes from Adjusted EBITDA the effects of contract amendments that mitigated potential loss positions and restructuring costs.

"Contribution margin," as used in this release, is defined by the company as segment revenues less related direct or indirect allocable costs, including headcount and headcount-related overhead costs, consulting and subcontractor costs, travel, marketing and network infrastructure and bandwidth costs. Contribution margin excludes unallocated corporate overhead, interest, taxes, depreciation and amortization, amortization of intangible assets, share-based compensation, impairment of goodwill, impairment of intangibles, other income, minority interest, restructuring provisions, and unusual items such as contract amendments that mitigated potential loss positions. These exclusions reflect costs not considered directly allocable to individual business segments and result in a definition of contribution margin that does not take into account the substantial cost of doing business.

Management believes that "Adjusted EBITDA before unusual items" and "contribution margin" are relevant and useful measures, when considered in conjunction with the comparable GAAP measures, for use by investors in evaluating the operational performance of the company. They are some of the principal measures used by OpenTV's management to assess the financial performance of its business. OpenTV's management believes that both Adjusted EBITDA before unusual items and contribution margin provide meaningful information because each measure represents a transparent view of OpenTV's recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and benchmarking between segments and identify strategies to improve operating performance. While OpenTV's management may consider Adjusted EBITDA before unusual items and contribution margin to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, loss from operations, net loss, cash flow and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States that are presented in the financial statements included in this press release. Additionally, OpenTV's calculation of Adjusted EBITDA before unusual items and contribution margin may be different from the calculation used by other companies and, therefore, comparability may be affected. OpenTV reconciles Adjusted EBITDA before unusual items and each reported segment's contribution margin to its consolidated net loss as presented in the accompanying financial statements, because OpenTV believes consolidated net loss is the most directly comparable financial measure presented in accordance with GAAP.

While OpenTV believes that the presentation of non-GAAP financial measures contained in this press release complies with the rules and guidance of the SEC, it can give no assurance that it will be able to provide the same or comparable measures in future press releases or announcements. OpenTV may, in the future, determine to present non-GAAP financial measures other than "Adjusted EBITDA before unusual items," "Adjusted EBITDA" and "contribution margin" that it believes may be useful to investors. Any such determinations will be made with the intention of providing the most useful information to investors and will reflect the information used by OpenTV's management in assessing its business, which may change from time to time.

Cautionary Language Regarding Forward-Looking Information

The foregoing information contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in political, economic, business, competitive, market and regulatory factors. In particular, factors that could cause our actual results to differ include risks related to: market acceptance of interactive television services and applications such as ours; delays in the development or introduction of new applications and versions of our service; technical difficulties with networks or operating systems; our ability to manage our resources effectively; changes in technologies that affect the television industry; and the protection of our proprietary information. These and other risks are more fully described in our periodic reports and registration statements filed with the Securities and Exchange Commission and can be obtained online at the Commission's web site at http://www.sec.gov/. Readers should consider the information contained in this release together with other publicly available information about our company for a more informed overview of our company. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Open TV

OpenTV is one of the world's leading providers of solutions for the delivery of digital and interactive television. The company's software has been integrated in over 88 million digital set-top boxes and digital televisions around the world. The software enables enhanced program guides, video-on-demand, personal video recording, enhanced television, interactive shopping, interactive and addressable advertising, games and gaming and a variety of consumer care and communication applications. For more information, please visit www.opentv.com.

                                 OPENTV CORP.                     CONDENSED CONSOLIDATED BALANCE SHEETS                     (In thousands, except share amounts)                                             March 31,        December 31,                                               2007             2006 *                                           (Unaudited)                  ASSETS   Current assets:        Cash and cash equivalents                 $46,763           $48,616        Short-term marketable debt         securities                                21,003             8,681        Accounts receivable, net of         allowance for doubtful accounts         of $448 and         $348 at March 31, 2007 and         December 31, 2006,         respectively                              20,085            20,560        Prepaid expenses and other         current assets                             5,448             5,799             Total current assets                  93,299            83,656    Long-term marketable debt securities             4,020             7,928   Property and equipment, net                      7,161             7,231   Goodwill                                        98,662            98,645   Intangible assets, net                          16,776            18,477   Other assets                                     4,734             4,827             Total assets                        $224,652          $220,764     LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY   Current liabilities:        Accounts payable                           $2,358            $4,335        Accrued liabilities                        13,877            17,020        Current portion of accrued         restructuring                              1,003               416        Current portion of deferred         revenue                                   17,459            12,614             Total current liabilities             34,697            34,385    Long-term liabilities:        Taxes payable                               1,771             1,920        Deferred rent                               1,148             1,201        Accrued restructuring                       1,168             1,954        Deferred revenue                           13,934            12,987             Total long-term liabilities           18,021            18,062              Total liabilities                     52,718            52,447    Commitments and contingencies    Minority interest                                  477               486    Shareholders' equity:        Class A ordinary shares, no par         value, 500,000,000 shares         authorized;         108,145,056 and         107,906,960 shares issued         and outstanding,         including treasury shares, at March         31, 2007 and December 31,         2006, respectively                     2,235,686         2,235,495        Class B ordinary shares, no par         value, 200,000,000 shares         authorized; 30,510,150         and 30,631,746         shares issued and         outstanding         at March 31, 2007 and         December 31, 2006,         respectively                              35,953            35,953        Additional paid-in capital                498,191           491,630        Treasury shares at cost, 76,327         shares                                       (38)              (38)        Accumulated other comprehensive         loss                                        (243)             (261)        Accumulated deficit                    (2,598,092)       (2,594,948)            Total shareholders' equity            171,457           167,831   Total liabilities, minority interest    and shareholders' equity                     $224,652          $220,764     * The condensed consolidated balance sheet at December 31, 2006 has been   derived from the company's audited consolidated financial   statements at that date.                                    OPENTV CORP.                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               (In thousands, except share and per share amounts)                                              Three Months Ended March 31,                                                2007              2006                                                     (Unaudited)    Revenues:        Royalties and licenses                     $17,861           $16,371        Services and other                           8,545             8,525                    Total revenues                  26,406            24,896   Cost of revenues:        Royalties and licenses                       1,684             1,741        Services and other                          10,441             9,058                     Total cost of revenues          12,125            10,799    Gross profit                                     14,281            14,097   Operating expenses:        Research and development                     8,863             8,363        Sales and marketing                          2,896             2,653        General and administrative                   5,514             5,348        Amortization of intangible assets              510               529                    Total operating expenses        17,783            16,893    Loss from operations                             (3,502)           (2,796)   Interest income                                     504               550   Other income                                         72                 3   Minority interest                                     9                 9             Loss before income taxes               (2,917)           (2,234)   Income tax expense                                  227               893             Net loss                              $(3,144)          $(3,127)    Net loss per share, basic and diluted            $(0.02)           $(0.02)    Shares used in per share calculation,    basic and diluted                          138,505,301       135,976,561                                    OPENTV CORP.                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                (In thousands)                                             Three Months Ended March 31,                                               2007              2006                                                    (Unaudited)   Cash flows from operating activities:   Net loss                                       $(3,144)          $(3,127)   Adjustments to reconcile net loss to    net cash from operating activities:        Depreciation and amortization of         property and equipment                       970               749        Amortization of intangible         assets                                     1,701             1,765        Share-based compensation                    1,115             1,071        Non-cash employee compensation                 26                27        Provision for doubtful accounts               100                65        Loss on disposal of fixed assets              -                   6        Minority interest                              (9)               (9)        Changes in operating assets and         liabilities:             Accounts receivable                      375            (4,367)             Prepaid expenses and other              current assets                          351              (189)             Other assets                              93              (317)             Accounts payable                      (1,977)             (957)             Accrued liabilities, taxes              payable and deferred rent            (3,345)            2,691             Accrued restructuring                   (199)              (67)             Deferred revenue                       5,792               628             Net cash provided by /              (used in) operating              activities                            1,849            (2,031)    Cash flows from investing activities:   Purchase of property and equipment                (904)             (637)   Proceeds from sale of marketable debt    securities                                      4,288             3,311   Purchase of marketable debt    securities                                    (12,681)             (215)            Net cash provided by / (used             in) investing activities              (9,297)            2,459    Cash flows from financing activities:   Capital contribution from the    controlling shareholder                         5,395               -   Proceeds from issuance of ordinary    shares                                            199                35             Net cash provided by              financing activities                  5,594                35    Effect of exchange rate changes on    cash and cash equivalents                           1              (245)    Net increase / (decrease) in cash and    cash equivalents                               (1,853)              218    Cash and cash equivalents, beginning    of period                                      48,616            47,229    Cash and cash equivalents, end of    period                                        $46,763           $47,447    Supplemental disclosure of cash flow    information:   Cash paid for income taxes                       $(522)            $(277)    Non-cash investing and financing    activities:   Conversion of exchangeable shares                  $17           $17,427                                    OPENTV CORP.                   SEGMENT INFORMATION AND RECONCILIATION OF              CONTRIBUTION MARGIN AND ADJUSTED EBITDA TO NET LOSS                                 (In thousands)                                              Three Months Ended March 31,                                                2007              2006    Revenues:   Middleware and integrated    technologies      Royalties and licenses                       $16,551           $15,581      Services and other                             5,123             4,251         Subtotal - Middleware and integrated                           technologies             21,674            19,832   Applications      Royalties and licenses                         1,310               790      Services and other                             3,136             3,297         Subtotal - Applications                     4,446             4,087   BettingCorp      Services and other                               286               977         Subtotal - BettingCorp                        286               977   Total Revenues                                  $26,406           $24,896    Contribution Margin / (Loss):   Middleware and integrated technologies           $6,704            $7,658   Applications                                         88              (793)   BettingCorp                                        (867)             (809)    Total Contribution Margin                         5,925             6,056    Unallocated corporate overhead                   (5,615)           (5,240)    Adjusted EBITDA                                     310               816    Depreciation and amortization                      (970)             (749)   Amortization of intangible assets                (1,701)           (1,765)   Share-based and non-cash compensation            (1,141)           (1,098)   Interest income                                     504               550   Other income                                         72                 3   Minority interest                                     9                 9    Loss before income taxes                         (2,917)           (2,234)   Income tax expense                                  227               893    Net loss                                        $(3,144)          $(3,127)  

FCMN Contact: edwards@braincomm.com

Source: OpenTV, Inc.

CONTACT: investors, Todd St. Onge, stonge@braincomm.com, or Brad
Edwards, edwards@braincomm.com, both of Brainerd Communicators,
+1-212-986-6667; or media, Barbara Cassidy of OpenTV, +1-415-962-5000, or
barbara.cassidy@opentv.com

Web site: http://www.opentv.com/

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