XPER - Earnings call 3 2023

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Operator

Good day, everyone. Thank you for standing by. Welcome to the Xperi Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mike Iburg, Xperi Head of Investor Relations. Mike, please go ahead.

Michael Iburg

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

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

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

are that, to to I'd note unless prior otherwise year. all the like same the comparisons quarter in First, stated,

of quarter prior third is In was from calculated Holding basis the addition, as October Corporation carve-out a XXXX Xperi to Xperi Adeia. on now known Holding seperation Xperi X, Corporation on XXXX.

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

Factors uncertainties For could to from we more discuss that today. differ recent our Form our cause XX-Q. most our Risk MD&A risks on refer materially the results to SEC filings, what and information Please including section in and actual the

or that update not after call. the does forward-looking events these circumstances intend company this to to arising note or statements Please reflect alter

website. to and directly Which detailed which financial non-GAAP the earnings found in their in be can section release Third, measures, our comparable Relations refer accompanied we of to certain reconciliations measures. by are most GAAP Investor the

after the over this Jon this replay call of CEO, of conference call website will conclusion a Kirchner. shortly on I Lastly, turn Xperi's available will be call. to the now our

Jon Kirchner

Earnings XXXX for Mike, on and Third us Call. Quarter you, you, everyone, joining Thank thank our

Robert just you financial during but a on me a results. touch highlights. through the the We I'll quarter, while strategic in momentum delivering priorities, continued few on let moment, details solid walk let our

the Revenue breakeven improving increase adjusted saw Connected year quarter in up same Media ago growth quarter, strong $XXX adjusted At margin. in in X% EBITDA, from from to Car. in year, we a Platform X% significant and was primarily a prior driven the by million, the time, the EBITDA

million from of $XX We quarter. cash also during the operations flow generated

you of given we and X the have trailing Adeia separated demands, are from year-over-year growth. and business encouraged revenue Overall, year associated delivering we with mid-single-digit many delivered As we separation, a consecutive with geopolitical basis. macro ago. may quarters today's revenue And the recall, growth on of results, now XX-month a uncertainty, by economic

DTS automotive the comfort monetization. radio, improve In video enhance broadband experience remain and smart TiVo focused where technology our we we power opportunities. Internet and TV convenience. machine to And X to safety, and DTS platform. operating viewing, drive where Overall, industry-leading, on Cabin monetize and imaging combines growth we TVs and key metadata video over broadcast IPTV, Connected AutoStage system combines entertainment, where to ad-supported Advertising, learning long-term in-cabin offer an where Monitoring, content-first AutoSense automotive offer

we be markets next as passes, Each growing growth, these momentum over specific necessary and in participate deliver to continues to are With and rapidly successful. we expected double increasingly positioned on is this business milestones quarter that X to the operational our of well years. build to each roughly the

and at OS, Our X.X for this AutoStage with TVs originally have IPTV DTS earlier year, XX Investor are and targets updated initiatives, active our cars Day footprint fall, a last TiVo our growth X-year AutoSense. million running outlined growth at and of to X these million least subscribers million

time our on current We XXXX provide complete these line. these baseline. exiting are incrementalized compared an the Based within increasingly confident year. these exceed on to that milestones, $XXX we achieve our update to our excuse execution revenue we million targets, or -- we targets this meet toward original progress we'll after plan our year, As strategic strong me, nearly we XXXX of expect annual

brand TiVo you walk that some smart Within JVC Vestel recent powered me has begun expected coming to consistent Media we've the to by is that to pleased retailers shipping the initially countries in our with shipments through additional TVs share Czech rollout the weeks, our reflect in Platform, European with multiple the for Republic. achievements been onto of now Production underway we're expecting. brands progress. Let

validates program our This further progress. technology and

win into As fourth we're footprint Smart We signed their sight activate, improved contract lineup TV and expect TV we TiVo line Europe, call heard show a about we At additional TVs in OEM February. could how recently to largest us wins for proposition was seeing our participants satisfying our by of electronics wanted the the these forward. to number TiVo and perhaps industry had proud broader We were in year-end value awards our to continuing XXXX. learn have momentum. integrate unique now in OS our more they to earnings extremely consumer XXXX and X who with going partner IFA, trade of additionally OS,

Europe partners in active plans the prospects. great we've and execution of around exceed driving of confidence a understanding or Media OS estimate million original we TiVo achieve committed X the our of strategy as quarter XXXX. and long-term we with exit increased was conversations our it growth recent and will its that our our users, U.S., independent Platform Given rollout Overall,

their showrooms video BMW's highlight in and Italy, Korea. TiVo, deployment South service, in the our DTS The United Germany, Car momentum now by generation rapid United cars series also of in Our France, AutoStage Connected business the Kingdom, quarter was Spain the lineup. States, are new These across powered X saw quarter. continued of

range models, to Equally exciting to AutoStage broad vehicle in the BMW's video regions segments. is decision additional expand various across service rollout of these a

solution, the we're with of a service AutoStage OEM. evaluating design and car to European manufacturers announce major second video our other car for win are DTS rollout, BMW pleased another heels the On

multiple This the new 'XX program began and will for year. initially Asia include model in models

Auto program AutoStage and into the HD North earlier new In addition, Company, unveiled now XXXX and American Show beginning radio Radio HD with program fall. was a Ford American and AutoStage North Motor This new certain for DTS Radio which incorporates with Nautilus. we vehicles, won this the its platform, at Lincoln launches

North million incorporating longevity radio, related HD and platform Connected our cars Radio, we relevance Lastly, for of technology and reaching the significant Car, a the American demonstrating ecosystem. achieved milestone standard XXX digital within

their TV double-digit growth the to Within business, with service more that to for XXth IPTV secular Pay subscriber our quarter, Pay have for TV the We helping consecutive have progress now providers IPTV core from selected steady continues solutions make than XXX the decline customers. offset TiVo's solutions.

improvement results creating customers. seen mid-single-digit the were X decline, the first modest QX in down X% in growth positive the Which now from first an increase are is the of in broadband strong a Our category. their year-over-year Pay over and through TV with wider IPTV, video Service months, our a solutions providers applications the deploying half range streaming of IPTV in competitiveness their digital offerings to offer market. their 'XX. networks and entertainment service Enhancing content to

these IPTV user services. content, their streams offer and interactive customer the deployments on-demand loyalty generating companies enable experience, to revenue additional also improving to connected overall and increasing

the a channels. available associated In of we ad-supported with we TiVo+, subscriber from addition channels over IPTV, free nearly curated of where offer also monetize content content, ad-supported XXX XXX of total fees television to monthly offering the viewing

U.S. have XX in X providers additional the market. and video service quarter service signed offering providers the We now in TiVo+

audio These these signed technologies products, major and to and next multiyear Consumer license integrate the manufacturers, allow technologies. their DTS Play-Fi validating renewals several Electronics. for into manufacturers or longevity Sony, several Turning We agreements Electronics years, with market Consumer to of wireless Skyworth. appeal the including Vestel innovative

of wide DTS:X addition, range solution, deploy to a consumer PCs top our X we across audio In signed a PC and laptops. OEM

trade IFA we at Lastly, X earlier won fall. Show Awards of Best the show DTS for this Play-Fi

Perceive, the big we customer. quarter. to first signed pleased Turning with And agreement in to tech expected, license as share revenue recognized we're that a a

over cultivating. the relationship future this expand very of time expect we potential are deal about opportunities and to are the and We this other excited

our edge. the path partnering our This approach industry opportunity. language magnitude low-power a opportunity models, strategic of to validates for continue market to progress the help explore at AI clearly options to large to the Recognizing accelerate in larger with the we interest

additional coming We expect the over report to quarters. progress

product since over lower product accomplished lot our structure. A we organization key focused stand-alone became a transform through core year, We're cost efficiency while to on past a and the execution, greater been driving growth and initiatives has company. working

progress on consistent vision this the profitability eve our of toward and the meaningful outlined path put together, with growth, improved a separation. ago on Taken has year us we a

achieved our long-standing vision but and partners extraordinary and Importantly, technology using BMW, with to the Media the speed across which we our experiences independent differentiated we our create agility, smarter in our with recent of partnerships. and and demonstrate strength only our Vestel of milestones, is operational customers Platform markets compete. of value The various not resonating

as continued that, making turn call toward growth exciting greater Robert TiVo discuss Video we by With our future now the with IPTV, in and market, an I'll well Connected and to great smart Cars Robert? as With to over profitability. powered financials. growth are in strides unlocking with the TVs double-digit

Robert Andersen

John. Thanks,

$XXX otherwise largest Total up period. the Mike declines, improvement earlier, revenue the quarter half for As in in the and prior X%. X% comments are seen significant my of up the from quarter our a the all comparisons was same mentioned modest ATV, million, noted, to in first third revenue unless the was year. category,

TV was we in saw business. quarter, by the which Pay offset IPTV solutions, core growth partially our in declines During strong our

we XX%, penetration higher increased was of increased categorized in partially AutoStage. the to prior volumes within a Consumer Car revenue by Connected amount from Electronics. new offset in Radio up Electronics DTS quarter, Audio Perceive, agreements HD was decline year down due period, automotive modest was from solutions to the console due strong and X%, the from revenue signed shipments, so strong revenue shipments of and which mostly game onetime Consumer

an timing increase and XX%, to partly certain revenue up due due solutions of our was primarily Platform middleware Media quarterly from TV to revenue. smart in

TV In in connected addition, advertising. and programmatic we direct saw growth sold

media advertising writers actor TV declines Somewhat solutions from Pay offset in by and within the and strike. our entertainment

gross from revenue existing to or and expense X% leverage growth improvement non-GAAP year's growth in the adjusted $XXX enable was and million business, XX%, margin the X% in high-margin for This is which $XXX for revenue to our the up year. million, sequentially solutions. carve-out due XXX prior last the Smart up increase our TV from within quarter operating Non-GAAP financials. due basis scaling IPTV Our middleware to was approximately an from of points quarter our infrastructure solutions,

an accounting was loss Our in share adjusted million, After $X.XX. resulting our expense, EBITDA for $X adjusted of interest EBITDA tax margin and was per non-GAAP X%.

$XXX The equivalents, balance with Moving to million $XX of the company and cash from QX. the of cash million quarter increase ended sheet. an

cash cash cash. expect million, be a to the of mentioned, the full from flow flow usage result operations quarter We operating in strong management. of working Jon the our capital was As still $XX year

Turning to our financial outlook for XXXX.

year revenue range the X%. facilitate full ranges faster be $XXX for narrowing expect DTS in $XXX our our guidance as maintaining on than driven million midpoint to to range in million, non-GAAP and adjusted commentary. products. in is $XXX following are TVOS the We areas here EBITDA wins to a have be lower now to expect The midpoint slightly previous the accelerated to We margin We X% providing these now of million. investments and prior progress incremental of range, penetration the AutoStage of

of non-GAAP We million. estimate continue tax to expect a full year $XX

not Our federal are tax and foreign to of primarily state linear throughout due withholding taxes. the certain the year, expenses and timing

million, QX expense approximately So of $XX quarters, non-GAAP be the with we through expect expense to X first million. approximately $X tax non-GAAP tax

to diluted share remarks. average fully is million the year. approximately count expected $XX concludes average Basic $XX million our That to still prepared count for share expected for And is year. the

now us for questions. Operator? open call Let the

Operator

Instructions] Kreyer from Craig-Hallum. comes the of from Jason Your question first [Operator line

Jason Kreyer

the hardware that hear TiVo-powered shipping. got new to Great you've

for the segment? that you then we the impact should rev if shares revenue expect can if to expect progression maybe touch revenue curious providers through recognition, far you that And in and as can kind with of just the as P&L? Just what talk on then like how you

Jon Kirchner

Sure.

monetize that So ability Jason, as I TV foremost, building footprint. appreciate, a is, the of think can footprint and the you well function to first

you'll then activated. more field the expect of shipped be due 'XX into course, to and So we see monetization. begin In units we ultimately, course the as -- to in

from ramp back that think a and typical is I ad timing waterfall And it through there's a lag that between be time. an they'll the the recognition, revenue ad is and and and a ultimately, when billed where over exact monetization. goes monetization a programmatic time shown, collected, of bit following typical shown end when is see model, You'll the ultimate of

footprint folks say the changing, engaging is and we'll as specifically realize I is clearly But and that into model ultimately over our how that just 'XX we the interest time, viewing. how think to have as more around of users because get well what to is that platform with I as

smaller to ads CPMs ramp We being like better ultimately, will to to ultimately are though, will at also to based of whether is, starting on understand because footprint over and ARPU that mix. ultimate geographic what geographic model different kind and or going building, look on and depend U.S., you expect where then begin how the are will ad Of it the placed and markets be it's the what the And mix. the time. it, to do help Europe ARPUs

Jason Kreyer

Perfect. there We'll on wait Perceive. into for a Year. question Kind more details New the similar of

kind as how Just in, go side. we 'XX on But us on of expect you that kind can you're we generating into costs to and here, getting how from should get wondering generation that's the that that as forward there, fade expectations great the now we the obviously, cost give of any revenue revenue?

Jon Kirchner

clearly in cost the impact February revenue say and net what carry. we'll around of is think to more of have I the

more the -- cost as hard to looking silicon models than as lot hard engineering, opposed thing language to -- base licenses, component. into one how get than just on whatnot. moving think of is it's is silicon more and labor software-based say to such as we're large the more product we 'XX. I and about technology particularly hard and again, But ongoing a cost exploit That's towards therefore, and Perceive potentially as the via that any applications software

Operator

from Rosenblatt comes the from Your Securities. of next Frankel Steven question line

Steven Frankel

Could any line it insight using deployed an end us customer you is product before what's how of Perceive. follow kind give actually into and up initial on to this the Jon, the time product? into gets

Jon Kirchner

sensitive. Joe think, next generation over Steve, both revenue let's get years. specifics it around it's say the confidential what really -- I I [ the just let's is, I because and can into share ] can't few

obviously, it of both at this we'll there's advisable see So given interest, be and it point. over the I all at commenting is, said it nature But about be not time. what would can what know

-- is to it's trying the of forthcoming. achieve. fair they're that But it's and is core say yet think And a not be market I part that to the what in will product technology

Steven Frankel

on is and faster And something wants about take investment be or either does it a incremental may get strategic investment this customer for to part your looking go? where material you that incremental to else? Or that investor catching this running to maybe

Jon Kirchner

has been build. we our let I to the to role to me a -- customer. is largely design part. work completed with get on this this core more which I speak our was customer in that, work is the to working to think can necessary component win, that yet that I needed implementation And obviously, is to think, support this There's particular this

ahead the we So -- the where rather sit, as us but behind say I far than majority as of vast would of is work us.

Operator

Stephens. comes next of Your question Nick the from Zangler from line

Nicholas Zangler

now. at maybe if the -- volatile of look million a particular the fourth between that segments just $XX talk guide high is or Curious end the year, or driving about the which quarter. spread maybe just just that Congrats and obviously there, you variability, that the you more in then? the could that When and are all the the low driving degree spread of for this quarter variability guide, progress which great revenue

Robert Andersen

within we agreements, our in a look of when of a and quarters Electronics. question. fair key fourth It's Pay one TV degree particularly you Nick. it's Yes, at have terms Consumer closing sure, I'd our really busiest quarter, say out -- fair of

we not, or we to then that us. can have timing variability So the would depending are terms out. reach if we're on will mindful And whether shift not acceptable there that we

have We for within Platform. also growth and variability advertising per you Connected I CE our shipments and could guess IPTV, unit also Car, both in the say subscriber within Media also

account So factors. appropriate number given we various those sure we an are all pieces, these want of the range make our variability to within to within putting that for

Nicholas Zangler

TiVo Understood. significantly of another then offering. sounds here. AutoStage incorporation side, the like again, Car expanding is No, great that's It one Connected the helpful. the plus And BMW on

But look about revenues this forward? of you can contributes there. ramp to congrats sort obviously, Connected So in in update, talk potential Car any just we how particular as

Jon Kirchner

Yes.

all the is components the over next of news few way. a also has to their over but that interest because as in I years. think Video, expansion ability Car of think done effective great to speaks needs, they're very story, BMW time been to welcome Certainly, work the think a and fast in continuing build in I production as typical has also to Connected car partner, platform I models this automotive, a the fairly lines, respond I think, that and in our project, a

'XX. along not have guiding you So the into more we think But automotive, naturally I yet we're February, to that about get who a partner, other to things. and broadly with as with We'll on say experiences, fact platform, more great highly known fairly not deciding recognized engaging building technology early. go the is about but for major widely only being selective have

I certainly mix. the into us think help in it others getting will

And overall that already this think, can of just Car I folks positively I think done be second related next revenue, couple in have signed Connected order, over as years, that relatively prove in the up. short ramp the towards speaks which

Operator

question comes the Hamed Our of from next Khorsand line BWS from Financial.

Hamed Khorsand

progress call had was something you out. left up have I all? at AutoSense First -- at brought was all You question not there any on on this that

Jon Kirchner

been. has There

work don't say as customers. wins usual, customer on as advancing speak in given discussions you that as would supporting so to any but quarter well with have business continue to. pipeline always business have, We we I to

program to the obviously, advancing on follow. more So lots of and intense work news

Hamed Khorsand

they now haven't the X other Europe? TV geographically beyond you only named just will Why but X X. then you've OEMs, yet? been And And expand have Okay. named

Jon Kirchner

have Hamed, again, channels, to say TV has in on look more got will partner just the keep you mind we'll to not in that here February of the to how about of retail they're announcements, what cetera. kind marketing everything like. every the from shape think et managing strategy I rollout to same

at are liberty not strategies. customer we rather are to we what respond So their really run front but to our are, needs

think know I get are. on those in as as both they'll So And partners to, and that closer out of roll engage be the is And helping promote, amongst who than you'll of next And X TVs. in us course, from our due there they're we signed. distribution what I more to we signed U.S. one year certainly, the what the expect doing. past, obviously, in say we we as can we've permit said the we've customers they and

more think the And active pipeline robust. shape again, think to I So I very, very follow. remains and

we we as So expect we progress to news in the more February. on TV get in just into broader as said OS, script, have

Hamed Khorsand

a Okay. that that lot highlight And guidance it QX, the operating if kind it of kind question, Robert, in Can use 'XX? the one of leverage, for may. depicts leverage of operating business? given as good enough? Or leverage. better last operating I for will a we Is be

Robert Andersen

indicating about I'm you the to leverage, we can kind asked question question you top of I that want properly. operating sure just answering As and your are you line expense? hold grow make

Hamed Khorsand

a providing, shows then sequentially. -- bit it Yes. given said your growth kind single about guidance mid-single-digit EBITDA as think digit the commentary well. was Jon, it quite of I growth And by But previous you're of

X X trying into just 'XX. I'm So for together put to

Robert Andersen

Yes.

we by that there's year. And a a these focusing the EBITDA leverage are We as on primary can But that is it spend. very business I for our the through things: thoughtful question no measure, think very top being itself -- this into get line for about that expanding And other X next answer as is the business one, initiatives. well yes. growing short margin. operating has

Operator

[Operator next the comes of from Matthew Instructions] line Galinko Your question from Maxim Group.

Matthew Galinko

some between offer impacting I'm volumes about guess, strikes any for thinking business how comments and the I dynamics it. you, some the dynamics? for you're of pricing outlook Automotive curious just how industry are in on Can you that in your

Jon Kirchner

far. with Yes. across do And impact Matt, the the foreign have from strikes the than weighted some have that just certainly, the pretty had volume the or business towards board. has slightly our we is part I business of say customers customers to that well U.S., rather we mix, different do although thus more of that is on would favorably limited

improvements is other we've say I The would whatnot. certainly and thing that, chain seen supply

I think balance hasn't net-net, impact this -- year. expect us of it too on much so Nor had thus an and on far do the it we in 'XX.

into 'XX, ultimately and not closely ahead you, in because rates higher to consumer and chains think with continue impacts maybe you strikes As you've that supply and I interest improved confidence, got and watching we're a demand. behind we'll place great how look the

on we think out look 'XX we'll it's think into as get coming on as sit seen the on 'XX fair be a next into the data point I based that, major of changes. finer concerns get and big to to industry we here view data But wouldn't of looking to I QX hand, of year. into some that But market about say, other with study I've and the that guidance necessarily for providing

Matthew Galinko

bit detail are? term if That's mentioned a there's some what lines. be follow-up, And little on think you Robert of Can helpful. they narrowing couple And in investments investments more just maybe business they're I there? going -- And repeat EBITDA guidance a you short to nature? as nature then in of around permanent what those kind of into a the go kind across if based of are incremental mentioned

Robert Andersen

Sure, Matt.

to So I a the has had X% X% with year, X%. to mid mid of X% margin the are for of numbers previously, XX% the And that EBITDA adjusted gave for X%. that we

are money while down make when it. drive wins. have our we driver It's that growth about a huge get on to efforts to profitability. the really TV But So mindful percentage and a And is you AutoStage our focused OS of being we from roughly the to here prior down our guidance. sure not point balancing amount investments

funded the you initiatives. color to wanted properly to had So add sure want Any that we I we additional to? think make

Jon Kirchner

say things. would X I Yes.

transitory with as As permanent into as get is of transitory, I you it think versus some possible. to customers more quickly as work as up them aggressively start and far the marketplace

I think as think more lot in behind and it -- as see expect we we'll 'XX, I EBITDA just more the over this thinking difference investments to So simple we about don't And say I slight are slight is, and about have get in expansion, a it as 'XX. that of other difference. you'll into it's terms obviously the than that thing material that because think

a if business result, as So we've to things. and those obviously made to other the support changes within fund will, help, you

won look of The being as great as we that's benefit we're more I the areas, business case, we've look in ahead, But So board. result as to a active as made in and our think faster is into we're far And this the in the and key some we plans. described was, growth that these of penetration going in across net 'XX. Robert some think revenue 'XX thing in of faster result we've and expected X I enjoy we a ahead decisions cases, the more than 'XX originally it.

Operator

further this our for now over no to at I queue in remarks. the team closing have the turn questions will call Xperi We time.

Jon Kirchner

to call. reviewing today's our concludes employees, thanks, to you in full I'd our joining for solid excited strategic for results We're QX like February. look helping and with forward performance. achieve and objectives. today's This We our very thank continue to continued and year Thanks, partners momentum us call. everyone, operator, and about customers our operating

Operator

you today's may disconnect. conference Thank call. for concludes participation, This you your and now

Xperi (XPER) 13 Nov 232023 Q3 Earnings call transcript