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Xperi Inc. Announces Third Quarter 2023 Results

Vestel Now Shipping TVs with TiVo OS

Xperi Signs Fourth Smart TV OEM

BMW Cars with DTS AutoStage Video Service in Showrooms and on the Road

Xperi Inc. (NYSE: XPER) (the “Company” or “Xperi”), an entertainment technology company that invents, develops, and delivers technologies that enable extraordinary experiences, today announced financial results for the third quarter ended September 30, 2023.

“Today’s results reflect the completion of our first year as a standalone company – a year highlighted by significant design wins and strong business momentum across our key growth areas, coupled with solid financial performance, including comparable 6% revenue growth over the prior year trailing twelve months,” said Jon Kirchner, chief executive officer of Xperi. “We are entering a particularly exciting phase as our business momentum is translating into tangible operational milestones, such as video services powered by TiVo now shipping in Vestel Smart TVs, as well as in BMW cars. When taken together with ongoing efforts to drive cost transformation, these milestones are important steps toward delivering on our strategic vision, improving profitability, and achieving significant long-term revenue growth,” added Kirchner.

Financial Highlights

GAAP Highlights ($ millions, except per share data)

Q3 FY23

Q3 FY22

Revenue

$130.4

$121.6

GAAP Operating Loss

($31.1)

($399.1)

GAAP Loss per Share

($0.96)

($9.54)

 

Non-GAAP Highlights ($ millions, except per share data)1

Q3 FY23

Q3 FY22

Revenue

$130.4

$121.6

Non-GAAP Operating Income/(Loss)

$4.3

($5.9)

Adjusted EBITDA

$9.3

($0.3)

Non-GAAP Loss per Share

($0.08)

($0.22)

1

For further information on supplemental non-GAAP metrics, refer to the “Non-GAAP Financial Measures” and GAAP to non-GAAP Reconciliations provided in the financial statement tables included below.

Recent Key Operating Achievements

Media Platform

  • Vestel is now shipping Smart TVs Powered by TiVo under the JVC brand to retailers in Europe.
  • Signed a fourth Smart TV OEM to integrate the TiVo Operating System into its 2024 European TV lineup.
  • Won three “Best of IFA” awards for TiVo OS at Europe’s largest consumer electronics tradeshow held in September.

Connected Car

  • DTS AutoStage Video Service, Powered by TiVo, has been integrated into the new generation BMW 5-Series. These vehicles are now in showrooms across the United States, Germany, United Kingdom, Italy, France, Spain, and South Korea. BMW will expand the AutoStage Video rollout in these regions to a broad range of additional models across various vehicle segments.
  • Won a second DTS AutoStage Video Service program with another major European automotive OEM. This deployment in multiple models will begin initially in Asia for the 2025 model year.
  • Won a new HD Radio and DTS AutoStage program with Ford Motor Company for its new radio platform unveiled at the North American Auto Show earlier this fall. This program is now in production for certain North American vehicles.
  • Reached a major milestone of 100 million cars incorporating HD Radio.

Pay TV

  • Posted double-digit year-over-year IPTV subscriber growth for the 17th consecutive quarter.
  • Over 100 service providers have now selected TiVo’s IPTV solutions for their customers.
  • Signed 5 new video service providers for the TiVo+ streaming service, which offers up to 160 channels of content curated from over 800 free ad-supported channels. TiVo+ is now deployed by 30 video service providers in the U.S.

Consumer Electronics

  • Signed several multi-year license renewals with major consumer electronics manufacturers, including Sony, Vestel, and Skyworth, for DTS audio or Play-Fi wireless solutions, demonstrating the market appeal and longevity of these solutions.
  • Signed a Top-3 global PC OEM to deploy DTS:X audio solution across a wide range of consumer PCs and laptops.
  • Won three “Best of IFA” awards for DTS Play-Fi, a whole-house wireless speaker solution.

Perceive

  • Signed license agreement with a Big Tech customer and recognized revenue in the quarter, validating Perceive’s approach to low-power AI at the edge.
  • Additional revenue will be recognized under this agreement over the next few years as Perceive technology is delivered and products ship.

Financial Outlook

The Company is narrowing its fiscal 2023 outlook ranges to the following:

Category ($ in millions)

GAAP Outlook

Non-GAAP Outlook

Revenue

$518 to $532

$518 to $532

Adjusted EBITDA Margin1,2

n/a

6% to 8%

1

See discussion of “Non-GAAP Financial Measures” below.

2

With respect to Adjusted EBITDA Margin, the Company has determined that it is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure with a reasonable degree of confidence in its accuracy without unreasonable effort, as items including restructuring and impacts from discrete tax adjustments and tax law changes are inherently uncertain and depend on various factors, many of which are beyond the Company's control.

Conference Call Information

The Company will hold its third quarter 2023 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Monday, November 13, 2023. To access the call toll-free, please dial 1-888-660-6513, otherwise dial 1-929-203-0876. The conference ID is 5483252. All participants should dial in 15 minutes prior to the start of the call using the conference ID listed above. Alternatively, the call can be accessed via the following webcast link: Q3 2023 Earnings Call Webcast.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on information available to the Company as of the date hereof, as well as the Company’s current expectations, assumptions, estimates and projections that involve risks and uncertainties. In some cases, you can identify forward-looking statements by the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “expect,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

About Xperi Inc.

Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands and partnerships (DTS®, HD Radio™, TiVo®), and by its startup, Perceive, and IMAX Enhanced, an IMAX and DTS partnership, are integrated into billions of consumer devices and media platforms worldwide, powering smart devices, connected cars and entertainment experiences. Xperi has created a unified ecosystem that reaches highly engaged consumers driving increased value for partners and customers.

Xperi, DTS, HD Radio, Perceive, TiVo, and their respective logos are trademarks or registered trademarks of affiliated companies and partners of Xperi Inc. in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company’s earnings release contains non-GAAP financial measures adjusted for either one-time or ongoing non-cash acquired intangibles amortization charges; amortization of capitalized cloud computing costs; costs related to actual or planned acquisitions, financing, and divestitures including transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; all forms of stock-based compensation; impairment of assets and goodwill; other items not indicative of our ongoing operating performance, and related tax effects for each adjustment. Management believes that the non-GAAP measures used in this release provide investors with important perspectives into the Company’s ongoing business and financial performance and provide a better understanding of our core operating results reflecting our normal business operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the tables attached hereto. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. All financial data is presented on a GAAP basis except where the Company indicates its presentation is on a non-GAAP basis.

Set forth below are reconciliations of the Company’s reported GAAP to non-GAAP financial measures.

XPER-E

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

 

Revenue

 

$

130,390

 

 

$

121,637

 

 

$

384,101

 

 

$

366,728

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

 

26,413

 

 

 

31,403

 

 

 

85,061

 

 

 

85,689

 

Research and development

 

 

56,436

 

 

 

57,070

 

 

 

166,993

 

 

 

158,641

 

Selling, general and administrative

 

 

59,620

 

 

 

56,702

 

 

 

173,893

 

 

 

156,894

 

Depreciation expense

 

 

4,248

 

 

 

4,990

 

 

 

12,543

 

 

 

15,697

 

Amortization expense

 

 

14,724

 

 

 

16,613

 

 

 

44,349

 

 

 

46,166

 

Goodwill impairment

 

 

-

 

 

 

354,000

 

 

 

-

 

 

 

354,000

 

Impairment of long-lived assets

 

 

-

 

 

 

-

 

 

 

1,096

 

 

 

-

 

Total operating expenses

 

 

161,441

 

 

 

520,778

 

 

 

483,935

 

 

 

817,087

 

Operating loss

 

 

(31,051

)

 

 

(399,141

)

 

 

(99,834

)

 

 

(450,359

)

Other expense, net

 

 

(1,336

)

 

 

(527

)

 

 

(60

)

 

 

(301

)

Loss before taxes

 

 

(32,387

)

 

 

(399,668

)

 

 

(99,894

)

 

 

(450,660

)

Provision for income taxes

 

 

9,685

 

 

 

2,024

 

 

 

14,481

 

 

 

12,500

 

Net loss

 

 

(42,072

)

 

 

(401,692

)

 

 

(114,375

)

 

 

(463,160

)

Less: net loss attributable to noncontrolling interest

 

 

(646

)

 

 

(890

)

 

 

(2,554

)

 

 

(2,706

)

Net loss attributable to the Company

 

$

(41,426

)

 

$

(400,802

)

 

$

(111,821

)

 

$

(460,454

)

Net loss per share attributable to the Company - basic and diluted

 

$

(0.96

)

 

$

(9.54

)

 

$

(2.61

)

 

$

(10.96

)

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in net loss per share calculations - basic and diluted

 

 

43,316

 

 

 

42,024

 

 

 

42,774

 

 

 

42,024

 

XPERI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

September 30,

 

December 31,

 

 

2023

 

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

131,530

 

 

$

160,127

 

Accounts receivable, net

 

 

64,171

 

 

 

64,712

 

Unbilled contracts receivable, net

 

 

61,148

 

 

 

65,251

 

Prepaid expenses and other current assets

 

 

38,946

 

 

 

42,174

 

Total current assets

 

 

295,795

 

 

 

332,264

 

Unbilled contracts receivable, noncurrent

 

 

21,926

 

 

 

4,289

 

Property and equipment, net

 

 

44,600

 

 

 

47,827

 

Operating lease right-of-use assets

 

 

43,969

 

 

 

52,901

 

Intangible assets, net

 

 

220,356

 

 

 

264,376

 

Deferred tax assets

 

 

2,465

 

 

 

2,096

 

Other noncurrent assets

 

 

35,122

 

 

 

33,158

 

Total assets

 

$

664,233

 

 

$

736,911

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

15,575

 

 

$

14,864

 

Accrued liabilities

 

 

109,924

 

 

 

110,014

 

Deferred revenue

 

 

25,979

 

 

 

25,363

 

Total current liabilities

 

 

151,478

 

 

 

150,241

 

Long-term debt

 

 

50,000

 

 

 

50,000

 

Deferred revenue, noncurrent

 

 

19,050

 

 

 

19,129

 

Operating lease liabilities, noncurrent

 

 

34,497

 

 

 

42,666

 

Deferred tax liabilities

 

 

12,246

 

 

 

12,899

 

Other noncurrent liabilities

 

 

10,507

 

 

 

12,990

 

Total liabilities

 

 

277,778

 

 

 

287,925

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

43

 

 

 

42

 

Additional paid-in capital

 

 

1,189,289

 

 

 

1,136,330

 

Accumulated other comprehensive loss

 

 

(5,493

)

 

 

(4,119

)

Accumulated deficit

 

 

(780,656

)

 

 

(668,835

)

Total Company stockholders’ equity

 

 

403,183

 

 

 

463,418

 

Noncontrolling interest

 

 

(16,728

)

 

 

(14,432

)

Total equity

 

 

386,455

 

 

 

448,986

 

Total liabilities and equity

 

$

664,233

 

 

$

736,911

 

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

2023

 

2022

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(114,375

)

 

$

(463,160

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation of property and equipment

 

 

12,543

 

 

 

15,697

 

Amortization of intangible assets

 

 

44,349

 

 

 

46,166

 

Stock-based compensation expense

 

 

51,681

 

 

 

29,761

 

Goodwill impairment

 

 

-

 

 

 

354,000

 

Impairment of long-lived assets

 

 

1,096

 

 

 

-

 

Deferred income taxes

 

 

(1,022

)

 

 

(451

)

Other

 

 

(162

)

 

 

(146

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

188

 

 

 

18,990

 

Unbilled contracts receivable

 

 

(13,556

)

 

 

623

 

Prepaid expenses and other assets

 

 

1,264

 

 

 

(14,884

)

Accounts payable

 

 

87

 

 

 

10,504

 

Accrued and other liabilities

 

 

(3,229

)

 

 

(824

)

Deferred revenue

 

 

537

 

 

 

(7,609

)

Net cash used in operating activities

 

 

(20,599

)

 

 

(11,333

)

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(9,432

)

 

 

(10,514

)

Purchases of intangible assets

 

 

(149

)

 

 

(110

)

Net cash paid for acquisition

 

 

-

 

 

 

(50,473

)

Net cash used in investing activities

 

 

(9,581

)

 

 

(61,097

)

Cash flows from financing activities:

 

 

 

 

Proceeds from issuance of common stock under employee stock purchase plan

 

 

5,850

 

 

 

-

 

Withholding taxes related to net share settlement of equity awards

 

 

(4,313

)

 

 

-

 

Net proceeds from Former Parent capital contributions

 

 

-

 

 

 

83,235

 

Net transfers from Former Parent

 

 

-

 

 

 

52,802

 

Net cash provided by financing activities

 

 

1,537

 

 

 

136,037

 

Effect of exchange rate changes on cash and cash equivalents

 

 

46

 

 

 

(4,184

)

Net (decrease) increase in cash and cash equivalents

 

 

(28,597

)

 

 

59,423

 

Cash and cash equivalents at beginning of period

 

 

160,127

 

 

 

120,695

 

Cash and cash equivalents at end of period

 

$

131,530

 

 

$

180,118

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid

 

$

2,244

 

 

$

-

 

Income taxes paid, net of refunds

 

$

15,504

 

 

$

9,460

 

Debt issued in connection with acquisition

 

$

-

 

 

$

50,000

 

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands, except per share amounts)

(unaudited)

 

Net loss attributable to the Company:

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

GAAP net loss attributable to the Company

 

$

(41,426

)

 

$

(400,802

)

 

 

 

 

 

Adjustments to GAAP net loss attributable to the Company:

 

 

 

 

Stock-based compensation(1)

 

 

17,622

 

 

 

13,015

 

Amortization of intangible assets

 

 

14,724

 

 

 

16,613

 

Goodwill impairment

 

 

-

 

 

 

354,000

 

Transaction, separation, integration and restructuring related costs:

 

 

 

 

Transaction, separation, integration and other related costs(2)

 

 

1,904

 

 

 

7,181

 

Severance and retention(3)

 

 

1,149

 

 

 

2,390

 

Non-GAAP tax adjustment(4)

 

 

2,764

 

 

 

(1,818

)

Non-GAAP net loss attributable to the Company

 

$

(3,263

)

 

$

(9,421

)

 

 

 

 

 

(1) Stock-based compensation included in above line items:

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

$

806

 

 

$

779

 

Research and development

 

$

6,584

 

 

$

5,515

 

Selling, general and administrative

 

$

10,232

 

 

$

6,721

 

 

 

 

 

 

(2) Transaction, separation, integration and other related costs included in above line items:

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

$

-

 

 

$

356

 

Research and development

 

$

-

 

 

$

1,772

 

Selling, general and administrative

 

$

1,904

 

 

$

5,053

 

 

 

 

 

 

(3) Severance and retention included in above line items:

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

$

-

 

 

$

-

 

Research and development

 

$

471

 

 

$

1,830

 

Selling, general and administrative

 

$

678

 

 

$

560

 

 

 

 

 

 

(4) The provision for income taxes is adjusted to reflect the net direct and indirect income tax effects of the various non-GAAP pretax adjustments.

 

 

 

 

 

 

 

 

 

Net loss per share attributable to the Company:

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

September 30, 2023

 

September 30, 2022

 

 

 

 

 

GAAP net loss per share attributable to the Company

 

$

(0.96

)

 

$

(9.54

)

 

 

 

 

 

Adjustments to GAAP loss per share attributable to the Company:

 

 

 

 

Stock-based compensation

 

 

0.41

 

 

 

0.31

 

Amortization of intangible assets

 

 

0.34

 

 

 

0.40

 

Goodwill impairment

 

 

-

 

 

 

8.42

 

Transaction, separation, integration and restructuring related costs

 

 

0.07

 

 

 

0.23

 

Non-GAAP tax adjustment

 

 

0.06

 

 

 

(0.04

)

Non-GAAP net loss per share attributable to the Company

 

$

(0.08

)

 

$

(0.22

)

 

 

 

 

 

GAAP weighted average number of shares-basic/diluted

 

 

43,316

 

 

 

42,024

 

Non-GAAP weighted average number of shares-basic/diluted

 

 

43,316

 

 

 

42,024

 

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

2023

 

2022

 

 

 

 

 

 

 

GAAP operating loss

 

$

(31,051

)

 

$

(399,141

)

 

Adjustments to GAAP operating loss:

 

 

 

 

 

Stock-based compensation

 

 

17,622

 

 

 

13,015

 

 

(5)

Amortization of intangible assets

 

 

14,724

 

 

 

16,613

 

 

Goodwill impairment

 

 

-

 

 

 

354,000

 

 

Transaction, separation, integration and restructuring related costs:

 

 

 

 

 

Transaction, separation, integration and related costs

 

 

1,904

 

 

 

7,181

 

 

Severance and retention

 

 

1,149

 

 

 

2,390

 

 

Non-GAAP operating income (loss)

 

$

4,348

 

 

$

(5,942

)

 

 

(5) Includes $2.4 million of stock-based compensation expense that was recognized in operating results as part of the corporate and shared functional employee’s expenses allocation during the three months ended September 30, 2022.

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

 

2023

 

2022

 

 

 

 

 

 

 

GAAP net loss

 

$

(42,072

)

 

$

(401,692

)

 

 

 

 

 

 

 

Interest expense

 

 

770

 

 

 

750

 

 

Provision for income taxes

 

 

9,685

 

 

 

2,024

 

 

Depreciation expense

 

 

4,248

 

 

 

4,990

 

 

Amortization of intangible assets

 

 

14,724

 

 

 

16,613

 

 

Amortization of capitalized cloud computing costs

 

 

1,316

 

 

 

435

 

 

Goodwill impairment

 

 

 

 

 

354,000

 

 

Transaction, separation, integration and restructuring related costs:

 

 

 

 

 

Transaction, separation, integration and other related costs

 

 

1,904

 

 

 

7,181

 

 

Severance and retention

 

 

1,149

 

 

 

2,390

 

 

Stock-based compensation

 

 

17,622

 

 

 

13,015

 

 

(6)

Non-GAAP Adjusted EBITDA

 

$

9,346

 

 

$

(294

)

 

 

(6) Includes $2.4 million of stock-based compensation expense that was recognized in operating results as part of the corporate and shared functional employee’s expenses allocation during the three months ended September 30, 2022.

 

Contacts

Xperi Investor Contact:

Mike Iburg

VP, Investor Relations

+1 408-321-3827

ir@xperi.com

Media Contact:

Amy Brennan

Senior Director, Corporate Communications

+1 949-518-6846

amy.brennan@xperi.com

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