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Xperi Inc. Announces Second Quarter 2023 Results

Strategic Momentum Continues with Additional Wins for TiVo OS and 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 second quarter 2023 financial results for the period ended June 30, 2023.

“We are pleased to see strategic momentum continue in key growth areas of our business, particularly in Media Platform and Connected Car. We had a productive quarter with TV partners, and now expect to see Smart TVs with our TiVo OS ship in North America next year. Further, our automotive design wins continue to build,” said Jon Kirchner, chief executive officer of Xperi. “These accomplishments continue to position us for long-term revenue growth and improved profitability.”

Financial Highlights

GAAP Highlights ($ millions, except per share data)

Q2 FY23

Q2 FY22

Revenue

$126.9

$126.2

GAAP Operating Loss

($35.2)

($22.3)

GAAP Loss per Share

($0.90)

n/a

 

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

Q2 FY23

Q2 FY22

Revenue

$126.9

$126.2

Non-GAAP Operating Income/(Loss)

($1.2)

$6.8

Adjusted EBITDA

$5.2

$12.1

Non-GAAP Loss per Share

($0.09)

n/a

1

For further information on supplemental non-GAAP metrics, refer to the “Non-GAAP Financial Measures” and GAAP to non-GAAP Reconciliations below.

Recent Key Operating Achievements

Media Platform

  • Announced Sharp as the second Smart TV OEM to launch TVs Powered by TiVo. The first TVs under this multi-year, multi-million-unit agreement are expected to ship in 2024 starting in Europe.
  • Signed a third Smart TV OEM to integrate the TiVo Operating System into their TV lineup in 2024.
  • Smart TVs Powered by TiVo are now expected to ship in North America next year, opening a new market for Smart TV monetization.
  • Signed an agreement with Sony to deploy our content search-and-discovery web browser within Sony’s Smart TV lineup, adding another element to our monetization footprint.

Connected Car

  • Expanded DTS AutoStage in-cabin entertainment platform to over four million vehicles globally, spanning five automotive brands. Contracted with broadcast groups representing over 4,000 radio stations to enhance the metadata and content delivered to AutoStage users.
  • Won a new DTS AutoSense program for in-cabin driver and occupant monitoring with a Top-3 car manufacturer. This global program is expected to begin incorporating AutoSense into vehicles in late 2024 for the 2025 model year.
  • Launched HD Radio in more than ten additional models in North America, furthering penetration in the new car market.

Pay TV

  • Continued double-digit subscriber growth in TiVo IPTV, signing seven new service providers across the Americas during the quarter.
  • TiVo+ streaming service is now available across 25 additional video service providers in the quarter, adding more scale to our monetization footprint.
  • Deployed TiVo search-and-recommendation technology with a Top-5 U.S. video service provider, reaching millions of additional households.

Consumer Electronics

  • Signed several multi-year license renewals with major consumer electronics manufacturers for DTS audio technology and Play-Fi wireless technology, demonstrating the market appeal and longevity of these solutions.

Financial Outlook

The Company reaffirms its outlook for fiscal 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 second quarter 2023 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Wednesday, August 9, 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: Q2 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 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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

126,872

 

 

$

126,203

 

 

$

253,711

 

 

$

245,092

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue, excluding depreciation and amortization of

intangible assets

 

 

30,856

 

 

 

26,879

 

 

 

58,648

 

 

 

54,286

 

Research and development

 

 

55,701

 

 

 

51,372

 

 

 

110,557

 

 

 

101,572

 

Selling, general and administrative

 

 

56,497

 

 

 

50,341

 

 

 

114,273

 

 

 

100,193

 

Depreciation expense

 

 

4,202

 

 

 

5,144

 

 

 

8,295

 

 

 

10,707

 

Amortization expense

 

 

14,798

 

 

 

14,760

 

 

 

29,625

 

 

 

29,553

 

Impairment of long-lived assets

 

 

-

 

 

 

-

 

 

 

1,096

 

 

 

-

 

Total operating expenses

 

 

162,054

 

 

 

148,496

 

 

 

322,494

 

 

 

296,311

 

Operating loss

 

 

(35,182

)

 

 

(22,293

)

 

 

(68,783

)

 

 

(51,219

)

Other income (expense), net

 

 

908

 

 

 

(290

)

 

 

1,276

 

 

 

226

 

Loss before taxes

 

 

(34,274

)

 

 

(22,583

)

 

 

(67,507

)

 

 

(50,993

)

Provision for income taxes

 

 

5,090

 

 

 

8,395

 

 

 

4,796

 

 

 

10,475

 

Net Loss

 

 

(39,364

)

 

 

(30,978

)

 

 

(72,303

)

 

 

(61,468

)

Less: net loss attributable to noncontrolling interest

 

 

(969

)

 

 

(848

)

 

 

(1,908

)

 

 

(1,816

)

Net loss attributable to the Company

 

$

(38,395

)

 

$

(30,130

)

 

$

(70,395

)

 

$

(59,652

)

Loss per share attributable to the Company:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted loss per share

 

$

(0.90

)

 

$

(0.72

)

 

$

(1.66

)

 

$

(1.42

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of shares used in per share

calculations - basic and diluted

 

 

42,770

 

 

 

42,024

 

 

 

42,499

 

 

 

42,024

 

XPERI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,159

 

 

$

160,127

 

Accounts receivable, net

 

 

75,870

 

 

 

64,712

 

Unbilled contracts receivable, net

 

 

60,068

 

 

 

65,251

 

Prepaid expenses and other current assets

 

 

39,972

 

 

 

42,174

 

Total current assets

 

 

288,069

 

 

 

332,264

 

Unbilled contracts receivable, noncurrent

 

 

16,840

 

 

 

4,289

 

Property and equipment, net

 

 

46,357

 

 

 

47,827

 

Operating lease right-of-use assets

 

 

47,013

 

 

 

52,901

 

Intangible assets, net

 

 

235,018

 

 

 

264,376

 

Deferred tax assets

 

 

2,395

 

 

 

2,096

 

Other noncurrent assets

 

 

35,435

 

 

 

33,158

 

Total assets

 

$

671,127

 

 

$

736,911

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

11,471

 

 

$

14,864

 

Accrued liabilities

 

 

91,122

 

 

 

110,014

 

Deferred revenue

 

 

24,623

 

 

 

25,363

 

Total current liabilities

 

 

127,216

 

 

 

150,241

 

Long-term debt

 

 

50,000

 

 

 

50,000

 

Deferred revenue, noncurrent

 

 

18,126

 

 

 

19,129

 

Operating lease liabilities, noncurrent

 

 

37,821

 

 

 

42,666

 

Deferred tax liabilities

 

 

12,462

 

 

 

12,899

 

Other long-term liabilities

 

 

11,092

 

 

 

12,990

 

Total liabilities

 

 

256,717

 

 

 

287,925

 

Commitments and contingencies

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

Preferred stock

 

 

-

 

 

 

-

 

Common stock

 

 

43

 

 

 

42

 

Additional paid-in capital

 

 

1,173,100

 

 

 

1,136,330

 

Accumulated other comprehensive loss

 

 

(3,174

)

 

 

(4,119

)

Accumulated deficit

 

 

(739,230

)

 

 

(668,835

)

Total Company stockholders’ equity

 

 

430,739

 

 

 

463,418

 

Noncontrolling interest

 

 

(16,329

)

 

 

(14,432

)

Total equity

 

 

414,410

 

 

 

448,986

 

Total liabilities and equity

 

$

671,127

 

 

$

736,911

 

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(72,303

)

 

$

(61,468

)

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

 

 

 

 

 

 

Depreciation of property and equipment

 

 

8,295

 

 

 

10,707

 

Amortization of intangible assets

 

 

29,625

 

 

 

29,553

 

Stock-based compensation

 

 

34,059

 

 

 

19,176

 

Impairment of long-lived assets

 

 

1,096

 

 

 

-

 

Deferred income taxes

 

 

(736

)

 

 

-

 

Other

 

 

(105

)

 

 

930

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(11,480

)

 

 

29

 

Unbilled contracts receivable

 

 

(7,324

)

 

 

5,083

 

Other assets

 

 

1,106

 

 

 

(4,714

)

Accounts payable

 

 

(4,691

)

 

 

3,835

 

Accrued and other liabilities

 

 

(20,428

)

 

 

(19,911

)

Deferred revenue

 

 

(1,743

)

 

 

(5,474

)

Net cash used in operating activities

 

 

(44,629

)

 

 

(22,254

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(6,108

)

 

 

(7,150

)

Purchases of intangible assets

 

 

(91

)

 

 

(73

)

Net cash used in investing activities

 

 

(6,199

)

 

 

(7,223

)

Cash flows from financing activities:

 

 

 

 

 

 

Net transfers from Former Parent

 

 

-

 

 

 

44,131

 

Proceeds from issuance of common stock under employee stock purchase plan

 

 

5,850

 

 

 

-

 

Withholding taxes related to net share settlement of restrict awards

 

 

(3,127

)

 

 

-

 

Net cash provided by financing activities

 

 

2,723

 

 

 

44,131

 

Effect of exchange rate changes on cash and cash equivalents

 

 

137

 

 

 

(2,092

)

Net (decrease) increase in cash and cash equivalents

 

 

(47,968

)

 

 

12,562

 

Cash and cash equivalents at beginning of period

 

 

160,127

 

 

 

120,695

 

Cash and cash equivalents at end of period

 

$

112,159

 

 

$

133,257

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Interest paid

 

$

1,496

 

 

$

-

 

Income taxes paid, net of refunds

 

$

10,109

 

 

$

8,418

 

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands, except per share amounts)

(unaudited)

 

Net loss attributable to the Company:

 

 

 

 

 

Three Months Ended

 

 

 

June 30, 2023

 

 

 

 

 

GAAP net loss attributable to the Company

 

$

(38,395

)

 

 

 

 

Adjustments to GAAP net loss attributable to the Company:

 

 

 

Stock-based compensation expense:

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

 

927

 

Research and development

 

 

6,405

 

Selling, general and administrative

 

 

10,759

 

Amortization of intangible assets

 

 

14,798

 

Separation and integration-related costs:

 

 

 

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

 

 

608

 

Separation costs recorded in selling, general and administrative

 

 

14

 

Severance and retention recorded in cost of revenue, excluding depreciation and amortization of

intangible assets

 

 

17

 

Severance and retention recorded in research and development

 

 

172

 

Severance and retention recorded in selling, general and administrative

 

 

246

 

Non-GAAP tax adjustment (1)

 

 

748

 

Non-GAAP net loss attributable to the Company

 

$

(3,701

)

 

 

 

 

 

 

 

 

Loss per share attributable to the Company:

 

 

 

 

 

Three Months Ended

 

 

 

June 30, 2023

 

 

 

 

 

GAAP loss per share attributable to the Company

 

$

(0.90

)

 

 

 

 

Adjustments to GAAP loss per share attributable to the Company:

 

 

 

Stock-based compensation expense

 

 

0.42

 

Amortization expense

 

 

0.35

 

Separation and integration related costs

 

 

0.02

 

Non-GAAP tax adjustment

 

 

0.02

 

Non-GAAP loss per share attributable to the Company

 

$

(0.09

)

 

 

 

 

GAAP weighted average number of shares-basic/diluted

 

 

42,770

 

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

 

 

42,770

 

(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 June 30,

 

 

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(35,182

)

 

$

(22,293

)

 

 

Adjustments to GAAP operating loss:

 

 

 

 

 

 

 

 

Stock-based compensation expense:

 

 

 

 

 

 

 

 

Cost of revenue, excluding depreciation and amortization of intangible assets

 

 

927

 

 

 

773

 

 

 

Research and development

 

 

6,405

 

 

 

5,681

 

 

 

Selling, general and administrative

 

 

10,759

 

 

 

6,086

 

 

(2

)

Amortization of intangible assets

 

 

14,798

 

 

 

14,760

 

 

 

Separation and integration-related costs:

 

 

 

 

 

 

 

 

Transaction and integration related costs recorded in selling, general and

administrative

 

 

608

 

 

 

2,058

 

 

 

Separation costs recorded in selling, general and administrative

 

 

14

 

 

 

-

 

 

 

Severance and retention recorded in cost of revenue, excluding depreciation and

amortization of intangible assets

 

 

17

 

 

 

(37

)

 

 

Severance and retention recorded in research and development

 

 

172

 

 

 

(193

)

 

 

Severance and retention recorded in selling, general and administrative

 

 

246

 

 

 

(62

)

 

 

Non-GAAP operating income (loss)

 

$

(1,236

)

 

$

6,773

 

 

 

(2)

Includes $2.0 million of stock-based compensation expense that was recognized in operating results as part of the corporate and shared functional employees expenses allocation during the three months ended June 30, 2022.

XPERI INC.

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

GAAP loss before taxes

 

$

(34,274

)

 

$

(22,583

)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

795

 

 

 

 

 

 

Depreciation expense

 

 

4,202

 

 

 

5,144

 

 

 

Amortization of intangible assets

 

 

14,798

 

 

 

14,760

 

 

 

Amortization of capitalized cloud computing costs

 

 

485

 

 

 

471

 

 

 

Separation and integration-related costs:

 

 

 

 

 

 

 

 

Transaction and integration related costs recorded in selling, general and

administrative

 

 

608

 

 

 

2,058

 

 

 

Separation costs recorded in selling, general and administrative

 

 

14

 

 

 

 

 

 

Severance and retention recorded in cost of revenue, excluding depreciation

and amortization of intangible assets

 

 

17

 

 

 

(37

)

 

 

Severance and retention recorded in research and development

 

 

172

 

 

 

(193

)

 

 

Severance and retention recorded in selling, general and administrative

 

 

246

 

 

 

(62

)

 

 

Stock-based compensation expense:

 

 

 

 

 

 

 

 

Cost of revenue

 

 

927

 

 

 

773

 

 

 

Research and development

 

 

6,405

 

 

 

5,681

 

 

 

Selling, general and administrative

 

 

10,759

 

 

 

6,086

 

 

(3

)

Non-GAAP Adjusted EBITDA

 

$

5,154

 

 

$

12,098

 

 

 

(3)

Includes $2.0 million of stock-based compensation expense that was recognized in operating results as part of the corporate and shared functional employees expenses allocation during the three months ended June 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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