- Earnings call transcript Q3 2022

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Operator

Good day, everyone. Thank you for standing by. Welcome to Xperi Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Jill Koval for Xperi. ahead. go please Jill,

Jill Koval

and thank quarter joining me XXXX are Executive call and Financial reports on as its today Officer; Chief Kirchner, third financial Jon Andersen, you afternoon, Chief us Officer. for Xperi the Robert Good results. With

to website there is today's at you investor.xperi.com. presentation, an on webcast release, with along access the earnings our addition earnings which In can Investor Relations

reminders. begin, Before like few would a I we provide to

presented on I for like being earnings note results reflect our to that as the to our results quarter carve would separation X, third a Xperi Corporation, Holding on Adeia, now First, to which Xperi prior financial known basis out Inc. October are Inc's from is XXXX quarter

projections, on future which to circumstances. or other Second, current contains management's risks, in today's and discussion statements are uncertainties, events, predictions, forward-looking therefore based and are statements beliefs, expectations changes subject and about that

call. uncertainties what the For today, section our from materially risk SEC the and or more Please arising in actual registration on differ factors alter forward-looking XX. intend events on to our that Form to information we refer the these that filings, including could reflect to to cause risks does a update please company this discussed statement or results after note statements not circumstances

and integration the amortization adjustments, foreign retention fees, impairment of Third, intangible transaction compensation, related costs charges, certain planned impact related bonuses. non-GAAP or measures, financial tax combinations, Separation of unrealized to actual including ongoing we to facility certain stock-based refer noncash headroom, which exclude acquired goodwill, effects. closures currency costs, business time or costs, one and

to in Kirchner. of earnings call to will of on Xperi's Jon Investor I release the GAAP directly our CEO, section also turn recording reconciliations comparable website. most call will provided conference the have Relations on the this available be these now over The and the non-GAAP website. of our measures We measures

Jon Kirchner

We've joining for of to past we quarter helping On of and of entire years, next of a make thank our to in step over front this the standalone separation Board thank appreciate the you all our employees around as as I call, look Thank and Directors you management call Jill. the company. to us a excited everyone the and the behalf your first and be earnings company. third traded the on you, extend opportunities forward team, publicly journey more to take And accomplished independent lot for our couldn't world partners success. newly I of two contributions sincere our and extraordinary We us. want a

business continue the and our challenging for representing the the global third on market million, I'm of results track they from for X% encouraged the demonstrate increase for our as was Total the our the quarter period. the a despite strength be year of quality by financial to quarter ago environment. $XXX.X macro third position year execution. We model, revenue

in September. year initiatives previously in increased Day quarter, with platform, IPTV during our the extremely momentum at results We're connected with line expect within be XXXX and car media the our growth our strategic wins guidance full We businesses. and pleased provided customer on financial key Investor traction to demonstrating

XX% benefit Analysts like independent estimate Investor market that September, our is Day At platform respectively. truly our the well while acquisition core lines in from platform One significantly, growing product July. strong multiple Adeia drove that think of as about Within closed including the also key in outlined SmartTV our are four markets. independent and growth more our of we strategy would across as media from Vewd projects, as mature. several We markets, operational ours. separation execution nearly growth integration areas these on We three critical others a the are SmartTV.

experience, While of is SmartTV the OEMs or ownership participate compelling is brand with our proposition and the it Vestel the validates customer product. our to over differentiated, usage-based that enabling life economics recent offering retain new, win value and in

we IFA, the execution in launch largest of quarter, strong shows. with continued electronics the momentum market our of TiVo OS one this the trade consumer and During world's at

first brands This These significant an addition SmartTV of is report TiVo to designs will announcing OEM TiVo. on leading entered OS XXXX, top SmartTV providing accelerate TiVo partnership six media of serving the an We that we KTC. writing affirms SmartTV In proof our TiVo the recently to tremendous OEMs Vestel independent to offer KTC OEMs by the more our to world, production powered one and partner powered demonstrate with in OEMs. the trends the we multiple have into adoption by platform. SmartTVs in which a for access website, opportunity independent recently are opportunity the cost by video platform. points posted turnkey effective agreement become

business. we during Pay-TV quarter announce pleased third sequential is represents that X I'm which market subscribers, momentum second million surpassed The continuing to the within our IPTV and IPTV growth.

subscription Importantly, classic growth than our rates, IPTV guide meaningfully higher element a to rates subscriber our contributing traditional are Pay-TV business.

connected is with solution. our car auto DTS stage market third The

see connected We continue of and future industry broad investments to the car. the initiatives into

the leading brands we a DTS safety Kia car, designed European OEM. connected During with Genesis, meaningful in long revenue manufacturer. wins programs, and saw automotive wins the growth. the set a to and area, three in area, term these automotive large AutoStage, quarter, Together, OEM infotainment we EV a top stage Also DTS AutoSense for the launched had in four continue Hyundai, Japanese for

with in increase a $XX the IMAX Turning brought strong in We from Sony with performance to million. TV the third new enhanced XX% speakers releases ecosystem with a the agreements and and TVs the quarter highest revenue year-over-year and our Play-Fi consumer as home core and DTS TCL. launched We business, had electronics Pictures financial for as Vestel theater from Rakuten Disney+ DTS sound quality new demonstrated and from the Philips. benchmark on

our product of innovative recognition industry portfolio. broad see to continue we Additionally,

Magic score of smartphone camera DXOMARK. camera This industry XXX, honors enhanced standard certified every out a latest iPhone beating the IMAX smartphone including quarter The in other X, Pro. gave XX reviews,

the received in media TV and Amsterdam, Show in interactive event multi-channel and Best honors Our the user the the DTS at conference trade global solution IBC, OS audio called TiVo for CSI respective an TiVo at technology and of start best Play-Fi categories both IFA one wireless awards.

One of most technology awards in the prestigious and the competitive industry.

to expect discuss Robert to our enter XXXX. products we turn at market Xperi, we With Urgo believe financials. Perceive, first turning the Lastly, for based I'll Robert? machine continues the edge to learning in to over disruptive and a proceed opportunity to that, large the call the represent

Robert Andersen

Thanks, Jon.

in and corporate development. tax, Xperi I'd legal, those accounting, finance, staff. begin, I Before like first to recognize Particularly

dedication completing huge their hard professionalism would a of and work business amount It achievement. in of of the For work proud involved separation. list long be tasks getting the is the prior team's incredible to very a to completed separation and and I'm the overstate

the October As counting to as are Holding quarter Xperi third earnings quarter from Xst results Cooperation, reported previously results for basis call on which carve-out our the reflect to noted Inc. being Adeia our is known prior Xperi separation on Inc's financial now

the attributable quarter XX% driven from revenue to results increase certain million, electronics revenue year. to growth accounted for standalone Consumer in total million continue of a a third quarter in we quarter primarily with ago being peering revenue while solid this increase double-digit year recognized multiyear agreements electronics quarter. XX% $XX expect from consumer of our consumer million a quarter X% company. electronics Total increase our by was for an strong will This third the forward is the $XXX.X of had be in business, third of in $XXX.X those third a year. which last Going

largest We at expect to the his digit revenue, business going PTV to generated of moderate is XX% QX total The forward. year period. down $XX million million, which towards single our ago $X.X growth business compared

churn our as solutions classic continued hardware in guides offset than in by and growth associated was in declines well business, As more healthy subscriptions. consumer our IPTV as

$XX connected quarter XX% car during with quarter accounted third flat year. business, relatively was the for of prior the million Our which revenue

DTS year. AutoStage audio car in Therefore, will HD chain offset and business XXXX DTS expect digits the to more single we than last to compared continued to by expect be This roughly radio due We issues. to down AutoSense, solutions connected declines our XXXX. in growth be grow compared and mid supply

$X.X final business million X% the advertising ago revenue third revenue in Note or the recognized revenue substantially Platform lower of Our a of one related grow to for in at Media third X% was year period business XXXX. The $X.X accounted businesses total this QX. the time from expect quarter. for quarter we to million a that substantially

next So media over few years. monetization. significant upside overall platform and footprint our the related Principally from growth SmartTV to we continue see in

of $XX X.X plus XX%. million slight gross intangible EBITDA Non-GAAP excluding million for revenue the a loss was non-GAAP of and was quarter operating expense adjusted margin adjusted cost as depreciation, was or $XX and Our amortization revenue, million. calculated

the equivalents, ended with going as cash $XX acquisition. for long-term position million. million was cash we debt which forward. to million business company's quarter at viewed $XXX the $XXX quarter of The the end the the sheet, Moving capital net of company sufficient balance view to Accounting and related to cash run the

million connection a of for in of in the quarter. review part charge quarter, As the $XXX a We the separation company. impairment of goodwill goodwill with in and of booked non-cash

statement million. quarter the of a cash cash was the at consolidated our $XX.X Looking in from flows, operations positive flow

to excluding of range to In in terms amortization range remarks. and million. is of depreciation that $XXX cost financial for expected million provided concludes of million expense the assets revenue reiterating and of the our to our non-GAAP September, the guidance Investor to million million adjusted we XXX prepared are of Adjusted in breakeven. the revenue, XXXX outlook, EBITDA in operating of $XXX in million That our $XXX range Day year intangible approximately the be XXX $XXX

open Let's for call questions. now Operator? the

Operator

Nick today question first from with Zangler Your comes Stephens.

Nick Zangler

and win And just quarter solid second the clarify want the OEM on POS. to I that. congrats off First the and

your come market indeed those regions? OS when TiVo what expect second TVs might and curious to in is that and you So just win TV, to

Jon Kirchner

to I manufacturer is for KTC brands. OEM an it's clarify, Nick, important think other

is are think to important So building that that be ready that is designs interested. for reference other about brands turnkey what go I to they're effectively are it going

groundwork more will, move the, we So it the begins ahead lay as 'XX and to and faster if 'XX. to look you production

be So would but we're we continue very the of lays when part to one number quarter an accelerate engaged to I continue next important express that look fact necessary and have what will is very, if the board it is the to here constructively over with we brands brand, infrastructure of others And will, on a not think with expect or leave more two. we just that the you doing. I KTC you it's as

Nick Zangler

goal TiVo correct? that was KTC represents the with end the is for powered case relationship, brands to incorporate the OS is Vestel as like But the that the

Jon Kirchner

their to believe they platform available OS for there is clients. are, and our demand there thus and Yes, that making are solution our it

to doing, I obviously it's as turnkey they manufacturing. up think would to us, be the connect dots,

Nick Zangler

on want I And quarter. it just to for came ask EBITDA, obviously, in the the flat adjusted

my first there, and adjusted the so, numbers imply are million, a the would the sequential just I you I for $XX just quarter, in number it think validation second and think negative in talk if about looking quarter, million maybe can fourth $XX right like if maybe downtick? EBITDA

Jon Kirchner

sure. Yes,

the a EBITDA on really You basis. mind have that is first to for adjusted keep the carve in out three quarters

So it costs. street, true not might of all reflect the standalone

costs. out So an uptick in really as not convention. accounting just look standalone but carved just an this do QX, because instance, in into operating expect we we it's expense It's

I to think of positive a over correct, would I than do little you're adjusted even, where have kind may think as we $XX finish. just year-to-date, we're that. think a your wanted talking of I about I break But kind a we a I give number we approximation to better bit So EBITDA, And, rough think, million. on

Nick Zangler

XX%. And laid adjusted does the single margin Day, think were hold there? the, down I you Does They still revenue Analyst any digit EBIT growth, change or of for that guys expectations XXXX. at mid out and

Jon Kirchner

we're Well, operating XXXX on that working in plan. work currently our progress. And,

the those call, continuing think to I when year. we annual lay and toward we're our out will obviously detail numbers head do give more

So our year. the goals for certainly those are

Robert Andersen

lot pipeline a on that I going a would line we're from certainly pretty about. think, in top there's add, excited I our perspective,

that me based EBITDA, target, that kind key an is planning allow excuse it and depending is mix. update provide we of a after we'll Because that scales. clearly some final as think revenue that our probably, And headed we to see on determination of believe continue in to are beyond further us the kind what's on coming we profiles. 'XX, that as different our that'll the we're holiday of things margin even we'll direction. our And gains, relative feedback, mix, where well or and to will, the XX% that I on see just have we're ultimate update doing

Nick Zangler

one these car wins. me. connected Last Congrats on all of for

we've So got some new of got it launching we've AutoStage. AutoStage, like new sounds brands bunch a launching brands

and for a the thinking those road. start know revenues? when come might products a actually necessarily not Just I might those a recognizing launch win when product about, few to market, years down represent you

So start of other the just versus announcement kind of revenues wins recognized. we these coinciding the see to when

Jon Kirchner

Yes, 'XX, in period, beyond. think some and that be I you revenue recognized I 'XX into think, you'll start more see get as but it to and 'XX becomes meaningful 'XX

joining these about I they're onto long-time have think hard but the are programs great the super of complex, that durability And our relates is, to years starts and they think very number quite people key tend to of car. generation thing you'll about very I see expected. are more becomes automotive we're connected excited of next accelerate a horizons. to kind we win, as current bit 'XX But there's infotainment and 'XX, beyond how next platform it and the safety acceleration meaningful in it XX that, about think and to

Operator

Your comes BWS. next from Hamed Khorsand, line of question the

Unidentified Analyst

Hamed. for [indiscernible] is This

of questions. Just a couple

or terms just description more could wins Europe, bit In give little any in of seeing with what a AutoSense having? of you're conversations you you're for any

Jon Kirchner

would Well, evaluations we across in another terms gotten our very be that number a look we line I said think very, have, that product, continue know, in we the AutoSense of other to you promising. say win of call penetration an deep model broader OEMs very entire for I on

year, from there's we So I in brands, next think believe more there sure. over to pipeline then AutoStage, business the I would more perspective, one the expect for heard, you infotainment be And wins, coming. announced here an three we

I has those the is safety, And of car doing pipelines. thinking along and to as and getting around the so flexibility of a of cabin, of infotainment lot the approach in as breadth is job connected about team the our dual solutions think and the the outstanding both pronged resonance, lines well an executing our

connected So future from car in our looks very very, good perspective.

Unidentified Analyst

question, then shift to and to electronics a bigger the final in second conversations are And related compared quarter? consumer you customer seeing

Jon Kirchner

you I'm would what the I'm want repeat sure conversations I difference sorry, to question? in make responsive context. in to

Unidentified Analyst

feedback, progressing As in difference can wise, terms provide any now terms and feedback, getting you're in seen the the versus now of how in it's you the whether between second quarter conversations? timeline of descriptive, QX on

Jon Kirchner

certainly seeing things mixed we're some some say, are different. would I feedback,

standpoint, I going game improvements Now, better up would are things so things look say like easing around and certain some of XXXX seeing from a whatnot. supply things into chain kind consoles

You're other period, inflation some maybe on people be throughout how their impacting holiday that macro uncertainty spent the driven year. that's here, of kind the other about, and dollars discretionary think is though factors and next by in seeing will may

three next impact is things we 'XX things the of going get guidance what think keep that. two ready to of significantly the very, the I very to over we're one give think is be So for evolving is, net months all that's to looking at I as and

very business a excess in touches Our broadly. industry the We products year. of very, a license, billion

lot dealing when think we're So and together into a is will different be we that of and certainly balance how pieces, with about February. comes guiding what on talking to get I

Operator

with from the question comes next of Galinko Group. Maxim line Matthew Your

Matthew Galinko

automotive using chain XXXX shipping you up how Radio, touched consumers more looking on things maybe I product on for supply guess side, normalized the side, but getting if into volumes? the at HD on are

Robert Andersen

pushed more we'll what vehicles, be and expected start we kind get think as able in and a far Based as the of to it the is see some 'XX. bit impedance 'XX. recovery seen our think was we've sum more of a second the in 'XX climb of of getting 'XX. and of into and there some appearing a supply ways, chain to less have, 'XX out We of In being half, out there'll solutions, Matt, in bit on the like feels we out will challenges data,

So, favorable, more been. at versus in generally 'XX we've speaking, looking car we're where

Matthew Galinko

pickup platform terms what it the of to? Is in media in expectation on relate just quarter. of fourth sequential does Can in you that, then context that a in touch any the And discussed new from would that is the trigger product? are that, you quarter previously, initial starting fourth we are the to revenues OEM of we the agreement seeing bump? see a sequential What in

Jon Kirchner

can I that. take

primary which the monetization from Now, also media there's viewed categories expect drivers the an two platform. expecting here, we're see to we fourth quarter. under acquisition, in we And contributions uptick during

those QX. primary we're drivers growth will for So two in the be expecting the

Operator

Craig-Hallum. from comes Richard question next the line of with Shannon Your

Richard Shannon

part a that next here, on of apply we year? guidance that with year think one quick Is level OpEx towards a no, higher think kind us investments that any in this on there this to I quarter, part kind either about us or didn't the lower do that Robert, two do And here, think of you about or how context previous versus give the the actually think I context? levels other third here. about we here start to, there seasonality of how than next would effects just question year? cause Is starting looking higher to way next? have

Robert Andersen

Yes, problem been net transformation continued the due profit efforts to a we've would it's as the standalone gives business. than, question, the say, undergoing really point a I this be starting quarterly which lower that business; good next average Richard. say expenses quarter, within we year fourth a expect to you

following kind without up because higher, and they lower fully average will interest sequential standalone from OEMs for but certain it on year. have basis we we'll come John, say doing signed the expenses, we noted, QX a organization, agreement quarterly there? annual build KTC. As quarterly an they this topic with be to some on Would we're and expect Question just strategy? you Or are out up of of view they next

Jon Kirchner

an time, take marketplace it time No, I interest that with enough had think and it's that have it's build fair seen and progress their our these to say reference These take things worth to they designs. they the of the turnkey in is investment former. engineering, work us to energy

Richard Shannon

I think wanted from I to I hear but case was guess that you.

that for thanks John. So

hear you a here. gave Let's number

over million, opportunity to, time ambitions recall over million first John, million. I us to can maybe you I think X next don't X one about what we near kind or mean, you a at IPTV for of is to kind even I least, subs know to say the for there. subs X subscribers a whatever? one, go the characterize when over are give get two what if where know, think on maybe you But or of what thought or give medium For some your the process term time, just years

Jon Kirchner

would in around and due that, the was held even either and timeframe, more that or pipeline, three boxes. to are to expect think fully The COVID, part have mid been I we we I top pretty agreements people due product two significant deploy with to set with in to of chain kind looking challenges think number up than year doubles. have supply

value well a And market subscription. return respect that in competitive. obviously, a is from deployments operating lower at of based services terms a offering video lowering, that IPTV solution well lot advanced as the with occur. where tend more both I think at the broadband of yet there's to super a to that of So have subscribers to And perspective, to as experience operator as an a of system pent rate the time the up cost subscribe

to together, put continue is all the backdrop situated that you to us advance. well So for

think millions bigger a get within there get I to than fair 'XX. in that does is now. we'll we laid this subscribers. already it the And say, think period than is occur. timing something we've But a think It's bit least it it's we ultimately February, to of kind of talk of I maybe at the the rate believe groundwork meaningfully business at to lot of little respect is into certainly as specific what I with it, midterm growth more the to exact

Richard Shannon

sense, were or there. please? macro of there Just in your an a want or the and to on engagement can months, on on recession you going the maybe engagement the regarding ago get timeframes. the there us update some effect on just And comments last months input maybe on update couple There what's couple

Jon Kirchner

I of that we've and/or as as as about quite the that been timing, say groundbreaking in with clearly of thinking new, mean, some are as what happening people people's engaged applications in I launching number it engagements can about chain platform. have both within are with deepen ways I continued products, with naturally potential think advance every we for of extent is promising, the think perceive to time. part people a both what's about supply comfort conversation, I And the well but

see 'XX. hasn't I And headline work well. in the we products going is changed, that's So to which expect say is ongoing the would

Operator

question-and-answer now like That concludes Jon would session. I back to to the today's turn Kirchner. call

Jon Kirchner

call. and joining today's thanks for operator everyone Thanks

during excited and that, later some thank that this are concludes at demonstrated business what And our we upcoming our our TiVo like Conference has Stephens forward wins. momentum by We see month. execution recent look continuing OS importantly growth to outstanding seeing the I'd to With today's Automotive of and about the a employees our challenging as prospects in we you been period. call. for

Operator

concludes you joining. today's Thank conference This for call.

disconnect. now may You

Xperi (XPER) 9 Nov 222022 Q3 Earnings call transcript