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Xperi Inc. Announces Fourth Quarter and Full Year 2022 Results

Strong financial performance in first quarter as an independent company

Awarded first design win for TiVo’s video platform in Connected Car

Xperi Inc. (NYSE: XPER) (the “Company” or “Xperi”), an entertainment technology company that invents, develops, and delivers technologies that enable extraordinary experiences, today announced fourth quarter and full year 2022 financial results for the period ended December 31, 2022.

“Our first quarter as an independent company was underscored by substantial market progress, notable design wins, and strong financial performance,” said Jon Kirchner, chief executive officer of Xperi. “Consumers are demanding higher quality digital experiences and our customers and partners are increasingly selecting our independent media platforms to meet that demand. We are intensely focused on expanding our platform adoption and our recent design wins in Smart TV and Connected Car are a testament to the ongoing success of our growth strategy.”

Financial Highlights

  • Revenue of $136M during the fourth quarter was up 9% from the year-ago period, while full year 2022 revenue of $502M was up 3% from the prior year.
  • Fourth quarter GAAP Net Loss was ($297M), or ($7.06) per share, and non-GAAP Net Income1 was $4M, or $0.08 per share.
  • Adjusted EBITDA1 was $4M for the fourth quarter, resulting in an Adjusted EBITDA margin of 3%.
  • The Company booked a non-cash charge of $258M in the fourth quarter for goodwill impairment and real estate restructuring in connection with its year-end review.
  • Full year results include the Xperi product business on a carve-out basis for the first 9 months, during which time it was part of Xperi Holding Corporation, now known as Adeia Inc. (Nasdaq: ADEA).

1 See discussion of “Non-GAAP Financial Measures” and GAAP to non-GAAP Reconciliation below.

Recent Key Operating Achievements

Media Platform

  • TiVo’s partner Vestel, the first Smart TV OEM to incorporate the TiVo Operating System (TiVo OS), announced the brand lineup for their Smart TVs Powered by TiVo will be Vestel, Hitachi, JVC, Daewoo, Regal, and Telefunken. These TVs will feature chipsets from market-leader MediaTek.
  • TiVo OS will be integrated onto Amlogic’s 4K and 2K chipsets designed for Smart TVs, significantly reducing cost and time-to-market for TV OEMs looking to roll-out TiVo’s independent media platform.

Connected Car

  • Xperi was awarded its first design win for TiVo’s video platform in Connected Car with a major European automobile manufacturer, with vehicles expected to ship in late 2023.
  • DTS AutoStage is now in production with five car brands and being deployed in more than 100 models across 140 countries, demonstrating the global value of our solution.
  • The Company was awarded a new design win for DTS AutoSense, Xperi’s Driver Monitoring System (DMS) and Occupant Monitoring System (OMS), with a major Asian automotive OEM, which will significantly expand Xperi’s DMS and OMS footprint beginning in 2024.
  • Xperi ended 2022 with committed business in Connected Car, consisting of HD Radio, DTS AutoStage, and DTS AutoSense, totaling more than $300M.

Pay TV

  • TiVo IPTV continued its double-digit subscriber growth in the quarter and finished FY22 with subscribers up 80% and revenue more than doubling compared to FY21.
  • TiVo’s IPTV platform won the Fierce Innovation Award for Customer Engagement.

Consumer Electronics

  • DTS:X, Xperi’s immersive audio technology, will be integrated in LG’s new line of OLED and premium LCD TVs, expected to be in the market in the first half of 2023.
  • The Company announced that Sony Pictures Entertainment, IMAX Corp., and DTS have extended their agreement to distribute multiple new titles in the IMAX Enhanced format, featuring DTS’ premium audio technology.
  • Xperi announced DTS:X is expected to launch on Disney+ in 2023.

Financial Outlook

The Company is providing the following guidance for fiscal year 2023.

Category ($ in millions)

GAAP Outlook

Non-GAAP Outlook

Revenue

510 to 540

510 to 540

Adjusted EBITDA Margin1,2

n/a

6% to 10%

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 fourth quarter and full year 2022 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Tuesday, February 21, 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 conference call and can use the conference ID to access the call. The Company also suggests using the webcast link to access the call at Q4 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, customers and consumers.

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 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 metrics.

SOURCE: XPERI INC.

XPER-E

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31,

2022

 

December 31,

2021

 

December 31,

2022

 

December 31,

2021

 

 

 

 

 

 

 

 

 

Revenue

 

$

135,531

 

 

$

124,745

 

 

$

502,260

 

 

$

486,483

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

 

37,258

 

 

 

37,643

 

 

 

122,946

 

 

 

125,626

 

Research and development

 

 

57,713

 

 

 

50,498

 

 

 

216,355

 

 

 

194,869

 

Selling, general and administrative

 

 

60,506

 

 

 

51,834

 

 

 

217,402

 

 

 

199,921

 

Depreciation expense

 

 

4,804

 

 

 

5,526

 

 

 

20,501

 

 

 

22,584

 

Amortization expense

 

 

16,044

 

 

 

22,045

 

 

 

62,209

 

 

 

105,311

 

Impairment of long-lived assets

 

 

7,724

 

 

 

-

 

 

 

7,724

 

 

 

-

 

Goodwill Impairment

 

 

250,555

 

 

 

-

 

 

 

604,555

 

 

 

-

 

Total operating expenses

 

 

434,604

 

 

 

167,546

 

 

 

1,251,692

 

 

 

648,311

 

Operating loss

 

 

(299,073

)

 

 

(42,801

)

 

 

(749,432

)

 

 

(161,828

)

Other income, net

 

 

2,117

 

 

 

1,078

 

 

 

1,815

 

 

 

1,590

 

Loss before taxes

 

 

(296,956

)

 

 

(41,723

)

 

 

(747,617

)

 

 

(160,238

)

Provision for income taxes

 

 

1,090

 

 

 

10,679

 

 

 

13,589

 

 

 

18,840

 

Net Loss

 

 

(298,046

)

 

 

(52,402

)

 

 

(761,206

)

 

 

(179,078

)

Less: net loss attributable to noncontrolling interest

 

 

(1,016

)

 

 

(630

)

 

 

(3,722

)

 

 

(3,456

)

Net loss attributable to the Company

 

$

(297,030

)

 

$

(51,772

)

 

$

(757,484

)

 

$

(175,622

)

Loss per share attributable to the Company:

 

 

 

 

 

 

 

 

Basic and Diluted loss per share

 

$

(7.06

)

 

$

(1.23

)

 

$

(18.02

)

 

$

(4.18

)

 

 

 

 

 

 

 

 

 

Number of Basic and Diluted shares outstanding

 

 

42,043

 

 

 

42,024

 

 

 

42,029

 

 

 

42,024

 

XPERI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

December 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

160,127

 

 

$

120,695

 

Accounts receivable, net

 

 

64,712

 

 

 

79,494

 

Unbilled contracts receivable, net

 

 

65,251

 

 

 

50,962

 

Other current assets

 

 

42,174

 

 

 

25,985

 

Total current assets

 

 

332,264

 

 

 

277,136

 

Long-term unbilled contracts receivable

 

 

4,289

 

 

 

3,825

 

Property and equipment, net

 

 

47,827

 

 

 

57,477

 

Operating lease right-of-use assets

 

 

52,901

 

 

 

61,758

 

Intangible assets, net

 

 

264,376

 

 

 

270,934

 

Long-term deferred tax assets

 

 

2,096

 

 

 

1,847

 

Goodwill

 

 

-

 

 

 

536,512

 

Other long-term assets

 

 

33,158

 

 

 

19,223

 

Total assets

 

$

736,911

 

 

$

1,228,712

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,864

 

 

$

7,362

 

Accrued liabilities

 

 

110,014

 

 

 

84,404

 

Deferred revenue

 

 

25,363

 

 

 

28,211

 

Total current liabilities

 

 

150,241

 

 

 

119,977

 

Deferred revenue, less current portion

 

 

19,129

 

 

 

23,663

 

Long-term deferred tax liabilities

 

 

20,559

 

 

 

14,428

 

Long-term debt

 

 

50,000

 

 

 

-

 

Noncurrent operating lease liabilities

 

 

42,666

 

 

 

49,017

 

Other long-term liabilities

 

 

5,330

 

 

 

5,670

 

Total liabilities

 

 

287,925

 

 

 

212,755

 

Commitments and contingencies

 

 

 

 

 

 

Company stockholders’ equity:

 

 

 

 

 

 

Net investment by Former Parent

 

 

-

 

 

 

1,025,838

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

42

 

 

 

-

 

Additional paid-in capital

 

 

1,136,330

 

 

 

-

 

Accumulated other comprehensive loss

 

 

(4,119

)

 

 

(676

)

Accumulated deficit

 

 

(668,835

)

 

 

-

 

Total Company stockholders’ equity

 

 

463,418

 

 

 

1,025,162

 

Noncontrolling interest

 

 

(14,432

)

 

 

(9,205

)

Total equity

 

 

448,986

 

 

 

1,015,957

 

Total liabilities and equity

 

$

736,911

 

 

$

1,228,712

 

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Twelve Months Ended

 

 

 

December 31, 2022

 

 

December 31, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(761,206

)

 

$

(179,078

)

Adjustments to reconcile net loss to net cash from operating activities:

 

 

 

 

 

 

Depreciation of property and equipment

 

 

20,501

 

 

 

22,584

 

Amortization of intangible assets

 

 

62,209

 

 

 

105,311

 

Stock-based compensation expense

 

 

45,303

 

 

 

33,509

 

Goodwill impairment

 

 

604,555

 

 

 

-

 

Impairment of long-lived assets

 

 

7,724

 

 

 

-

 

Deferred income taxes

 

 

(1,602

)

 

 

6,913

 

Other

 

 

24

 

 

 

(1,754

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

17,505

 

 

 

(2,416

)

Unbilled contracts receivable

 

 

(12,473

)

 

 

15,475

 

Other assets

 

 

(20,439

)

 

 

15,296

 

Accounts payable

 

 

6,633

 

 

 

(4,018

)

Accrued and other liabilities

 

 

11,123

 

 

 

(37,249

)

Deferred revenue

 

 

(8,302

)

 

 

1,974

 

Net cash from operating activities

 

 

(28,445

)

 

 

(23,453

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(14,207

)

 

 

(8,893

)

Purchases of intangible assets

 

 

(166

)

 

 

(186

)

Net cash paid for acquisitions

 

 

(50,473

)

 

 

(12,401

)

Net cash from investing activities

 

 

(64,846

)

 

 

(21,480

)

Cash flows from financing activities:

 

 

 

 

 

 

Net proceeds from capital contributions by Former Parent

 

 

83,235

 

 

 

-

 

Net transfers from Former Parent

 

 

52,802

 

 

 

83,330

 

Withholding taxes related to net share settlement of restrict awards

 

 

(286

)

 

 

-

 

Net cash from financing activities

 

 

135,751

 

 

 

83,330

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(3,028

)

 

 

(3,326

)

Net increase in cash and cash equivalents

 

 

39,432

 

 

 

35,071

 

Cash and cash equivalents at beginning of period

 

 

120,695

 

 

 

85,624

 

Cash and cash equivalents at end of period

 

$

160,127

 

 

$

120,695

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Debt incurred in connection with acquisition

 

$

50,000

 

 

$

-

 

Interest paid

 

$

756

 

 

$

-

 

Income taxes paid, net of refunds

 

$

13,416

 

 

$

11,801

 

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands, except per share amounts)

(unaudited)

 

Net income attributable to the Company:

 

 

 

 

 

 

Three Months Ended

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

GAAP net loss attributable to the Company

 

$

(297,030

)

 

 

 

 

 

 

Adjustments to GAAP net loss attributable to the Company:

 

 

 

 

Stock-based compensation expense:

 

 

 

 

Cost of revenue

 

 

729

 

 

Research, development and other

 

 

5,266

 

 

Selling, general and administrative

 

 

9,547

 

 

Amortization of intangible assets

 

 

16,044

 

 

Impairment of long-lived assets

 

 

7,724

 

 

Goodwill impairment

 

 

250,555

 

 

Acquisition and separation-related costs:

 

 

 

 

Transaction and other related costs recorded in selling, general and administrative

 

 

2,234

 

 

Severance and retention recorded in research, development and other

 

 

2,009

 

 

Severance and retention recorded in selling, general and administrative

 

 

291

 

 

Separation-related bonus adjustment recorded in cost of revenue, excluding depreciation and amortization of intangible assets

 

 

(24

)

 

Separation-related bonus adjustment recorded in research and development

 

 

(67

)

 

Separation-related bonus adjustment recorded in selling, general and administrative

 

 

91

 

 

Non-GAAP tax adjustment (1)

 

 

6,340

 

 

Non-GAAP net income attributable to the Company

 

$

3,709

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share attributable to the Company:

 

 

 

 

 

 

Three Months Ended

 

 

 

 

December 31, 2022

 

 

 

 

 

 

 

GAAP loss per share attributable to the Company

 

$

(7.06

)

 

 

 

 

 

 

Adjustments to GAAP loss per share attributable to the Company:

 

 

 

 

Stock-based compensation expense

 

 

0.37

 

 

Amortization expense

 

 

0.38

 

 

Impairment of long-lived assets

 

 

0.18

 

 

Goodwill impairment

 

 

5.96

 

 

Acquisition and separation-related costs

 

 

0.11

 

 

Non-GAAP tax adjustment

 

 

0.15

 

 

Difference in shares used in the calculation

 

 

(0.01

)

 

Non-GAAP diluted earnings per share attributable to the Company

 

$

0.08

 

 

 

 

 

 

 

GAAP weighted average number of shares-basic/diluted

 

 

42,043

 

 

Non-GAAP weighted average number of shares-diluted

 

 

46,470

 

 

(1)

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

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands)

(unaudited)

 

 

 

Three Months Ended

 

 

 

December 31, 2022

 

 

 

 

 

GAAP loss before taxes

 

$

(296,956

)

 

 

 

 

Interest expense

 

 

839

 

Depreciation expense

 

 

4,804

 

Amortization of intangible assets

 

 

16,044

 

Amortization of capitalized cloud computing costs

 

 

527

 

Impairment of long-lived assets

 

 

7,724

 

Goodwill impairment

 

 

250,555

 

Acquisition and integration-related costs:

 

 

 

Transaction and other related costs recorded in selling, general and administrative

 

 

2,234

 

Severance and retention recorded in research and development

 

 

2,009

 

Severance and retention recorded in selling, general and administrative

 

 

291

 

Separation-related bonus adjustment recorded in cost of revenue, excluding depreciation and amortization of intangible assets

 

 

(24

)

Separation-related bonus adjustment recorded in research and development

 

 

(67

)

Separation-related bonus adjustment recorded in selling, general and administrative

 

 

91

 

Stock-based compensation expense:

 

 

 

Cost of revenue

 

 

729

 

Research and development

 

 

5,266

 

Selling, general and administrative

 

 

9,547

 

Non-GAAP Adjusted EBITDA

 

$

3,613

 

 

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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