XPER - Earnings call transcript Q3 2024

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Operator

Thank you for standing by, and welcome to the Xperi Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to Mike Iburg, Head of Investor Relations.

You may begin.

Michael Iburg

Thank you, operator. Good day, everyone. by, Call. to standing XXXX Third for Conference Earnings you and Xperi's welcome Quarter Thank

presentation parties today's During all only a mode. listen will be in

Financial section. Robert its to today's Kirchner, presentation will for afternoon, me Officer. joining the we on as be call Anderson, XXXX you open Following Chief Xperi financial today reports With will and thank Jon now quarter Executive -- turn Q&A like Chief us sorry. third Officer; Good are an I results.

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

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

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

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

Form on the our our that company Risk or that from Please of today, call. to refer more not to could please XX-Q. what and we For MD&A materially results filings, financial risks our Factors most section the events differ update information statements XX-K alter our discuss arising cause uncertainties intend note to to forward-looking this after including does these reflect recent circumstances and SEC or and

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

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

Jon Kirchner

earnings and thank XXXX call. you, us Thank quarter you, everyone, our joining third on for Mike,

in results. increasingly efforts cost streamlining efforts our multiyear through the showing transformation successful business Our are

continue optimize margin be increase our will believe an results profile you While has we for continue operate our have been moment, differentiated to OS our naturally certain let of making That let which impacted to quarter we a financial automotive our overview environment growth some reduced to spending, TiVo of timing and seen years TVs. indication Smart continue growth. macro long-term and are this walk areas respect in the next global of as solutions we've I'll over just The strategic may a business quarterly ability drive provide CE Inflation, to me progress and details brief said, and in expect see first the quarter. for drive work demand important and the several of rollouts discretionary Robert but provides strategic the to mixed. delays we the the of that fluctuate, to business, performance with the costs. the we partner we challenges through significant in will business

product related continue To and in believe of rationalization our we the as have AutoSense of with a completed this we well we platforms as imaging now growth end, sale licensing sale and Importantly, recent long-term the greatest focus have media profit business as to period the of the Perceive. these and potential. business

continued of step profitability a a in seen numbers today. profitability they the contribute be reduction effects can in transformation The run forward rate focus. also in positive sale business results strategic the AutoSense divestiture each revenue, meaningful and our efforts While in posted and

and where metadata roughly more AutoStage our and video to adjusting $XXX offset these are $XX DTS and for and to Pay automotive in quarter key offer ongoing was due net million, XX% Car was Consumer driven long-term usage; years. as $XX.X quarter earlier ago declines enhance just Pay and the our and TV This XX% Adjusted and XX% deal mainly linear revenue where EBITDA of for result The to Non-GAAP in we combines the X TiVo TV, from industry-leading Video-Over-Broadband, monetization; approximately QX growth provide million by Advertising, Connected year sequentially, to see by the double households. TiVo cost Media guarantee on where the platform power access guide minimum streaming meaningful broadband-only operating of AutoSense three platform broadcast Entertainment, to million expected In-cabin and in remain TVs large and opportunities primarily content-first strength divestiture. devices the broadband Turning quarter. was this potential TV highlights to in X% Electronics year a and prior markets prior were Internet subscribers or performance when the QX multiyear up Strong in reported. divestiture the partially other from where X their the or monetize IPTV the adjusted focused Smart Connected experience Platform. differentiation. Each well our next from revenue, included as up of the These AutoSense declined is than We in quarter. headcount from year optimization up we we expenses Media X% which reduction a to tripling strong efforts, year. drive classic radio, over

we endpoints with revenue our are to of million from the XX our million and of our XXXX, usage monetizable footprint grow by we expect other and where position cars. active strengthen in broadband approximately end of positioned our devices, content markets consisting have XX million TiVo these ARPU comes platform. our communications, increasingly to in each home past Video-Over-Broadband is viewing of and as TVs Media XX down in goal to expand. of Breaking well solutions, including and continue ad-supported this million X of believe the We Connected market devices in comprised homes, an Consistent

revenue on Additionally, a per subscription households earn million solution, IPTV we expect approximately primarily our where household Video-Over-Broadband X basis. utilizing we

$XXX we have upselling fees, generate through license XXXX. in cars, advertising. million Lastly, monetizable features incremental XX revenue nearly relative DTS monetize We million will expect goal of of and our that to achieving we to endpoints AutoStage believe which million in XXXX should XX

Let QX Media TV me reflect Within Platform, recent our partner earlier. industry saw certain in we mixed of Smart into at some some part, volume of through this year shift in QX, These achievements that walk early reflect least our you environment mentioned the delays shifts, progress. into XXXX.

our expectations these a XXXX. delays As reduced consequence, monetization have for

revenue grow customer focus through available this across with Europe, including million platform. our partner year-end. as is track to X commitments by growing the device and Today, XXXX us This end our remains footprint our engagement Importantly, on and in we're pipeline unit that by acceleration user to X stage different units, the toward TiVo". under position footprint to of the tracking X recent our markets units brands. expand. we're largest beyond some and confident achieve of satisfaction continues goal our Smart At TVs our is our by footprint in million of XXXX QX to and device ensure and target activated approaching "Powered are generally Overall, maximum monetization footprint Smart numerous to TiVo" primary million "Powered our reflects by rollout, TVs

growth receive as over look by to Connected positive data viewing platform we value maximize continue to saw and from engagement Within strategic units, Car, We we're momentum. and some time. activated encouraged we

next We million vehicles impact per to production America this the and awarded of to market The we steps weakness strategically HD We in market business. revenue AutoStage. position new with also will us near-term to our emerging some go the believe with year. our this million will in video term. revenue to customer is now and with countries footprint which clear approach satisfaction and design are vehicles longer North expect market, signs in-cabin having and entertainment enhance monetization is unit Radio to there baseline additional in X into continues our build opportunities necessary DTS automotive Radio expand both HD wins, end-user X licensing with which footprint grow, than upon X XXX a However, AutoStage for take deployed engagement. Japanese one may were OEM, across more AutoStage

in Radio solution are Lastly, in even may overall over million Video-Over-Broadband our we enhancing subscriber penetration to potential TV, make and as be the surpassing North make impressive automotive households as HD models, the Pay continues progress the to IPTV reaching or new continue market Within OEMs adding X.X to time. market quarter softening, target. American progress, year-end

this with year. signing We TiVo operators incremental of also XX the total of number X to the expanded X with bringing Broadband operators, new

executed an operators. for bundle a a NCTC new low-cost over-the-top solution, broadband we for agreement providing with TV content Additionally,

TVs. for Our our footprint, U.S.-based rapidly growing expands this Smart offering, combined platform monetization new along low-cost with opportunity through our TiVo Video-Over-Broadband with

solution. Panasonic. with we within legacy a value products, TV Lastly, economic contribute classic our renewal of multiyear long-term to signed multiyear our significant legacy guide transactions Pay the These

to despite Perceive XX announced ambitious quarters, I'll that initial would Against on. movies. and advancements approximately of core reporting use in new electronics. XXXX tax multiple or of codec IFA The activities processing to significant that, $X during the the Xperi to on we often important with call TVs. Honor million strategic additional transaction million, now X experienced we awards. after Best the and to Clear they on we of won Robert? of to dialogue our for estimate customers, latest trouble complete strategic following solution signed expect Dialogue, continue X, net they're by October goals said on-device cash. X/X response, shows assets to AI-based Berlin, to said we the we've in objectives. our that gross U.S. X launched transaction. Masimo. $XX recent for respect of of year-end over and the Vestel, always We from With and make And an subtitles August At the adults In Amazon DTS now challenges, understanding $XX with X,XXX dialogue between in survey our audio Overall, our captions X with proceeds consumer many revealed million reduced summer, number we expected turn end happen tax A closed financial to long-term financials. Dialogue lastly, turned Perceive, of Clear renewals delivered to intelligibility our Turning improve set planning sale of Robert year-end. we XX% approximately discuss a that consumers X DTS survey existing have or a leverages toward solution of over against and certain progress With TV review of on and respondents objectives, by IFA for

Robert Andersen

Despite multiyear was TV, up that from Jon. Consumer of trend classic reported year's the in our down its recognize continued expected the was XX%, the decline last TV due last minimum in quarter's revenue to along electronics of year-over-year, due us to first X With end up year, from and for year the guarantee was This core certain AutoSense with that driven guarantee revenue primarily from higher With was for revenue market The double-digit gaming market also Media third and even of financial related quarter. X me results, year-to-date down let are to the primarily largest minimum the increase Pay XX% in-cabin last upfront, up XX% due compared in QX discuss Pay core year. QX. XX% year. in program our TV Tier automotive enter primarily automotive the adjusting apples-to-apples, was large that Total occurred to the compared we for structure products; against growth, by deal an the was seeing as guarantee in that QX significant up multiyear months with time. TV. year-to-date Middleware quarter quarter's compare the up also occurred was approximately X% growth, IPTV such order $XXX in be to and in the as reduces mind The to year-over-year year revenue collected was Connected this of revenue Pay divestiture. Solutions for to minimum Thanks, Imaging royalty year. revenue excluding category, our Asia-based due required XX% deals rate when divestiture bringing from prior benefited DTS revenue up core down the most a now to growth. this for cash the in supplier revenue weakness guide in let results. consoles. we year-to-date. products which over signs market-based will of though backdrop, XX% AutoStage revenue of deal deal Pay and codec Car me the last that second by softness quarter platform year's million, occurred agreements this part lower earlier TV XX% compare to Pay last X%

quarter are and Middleware of currently the prior our Media operating quarter Video-Over-Broadband confident was adjusted by OS the TiVo the the beginning the XXX with due based rate TV While the The remain was on were Media to related other million. and run October. as actions. reduction year. trends whom expands we the this for Pay the as driven expense the divestiture improvement products, Non-GAAP savings Platform tax within at the improvement our footprint sale which of personnel, and future the $X Non-GAAP also ad AutoSense over Platform subsidiary, along for in legacy Perceive was of as due growth earlier coming largely or in million, imaging was approximately most down of the cost completed of quarters. from U.S., $XX in $XX year-over-year to million XX% well This solutions the spending year business lower

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

deals quarter refinance million balance of not be next cash all, of quarters increase the the year. X sheet unbilled with million equivalents. The billed balance $XX to our due to debt also regard cash. sheet, receivables in expected total receivables Moving year planning to in higher July of $XXX XXXX, of are $XX minimum With and to converted an the cash debt the the the unbilled million, of to that's sheet. the most, overall matures of amount million balance which on to early X/X if of the ended we're next company amount this The $XX since shows and beginning completed. Approximately guaranteed of

by the We $XX capital shares at during With use allocation, of of are cash, already and million of capital an working underway driven on stock $X X.X repurchased quarter, Operating we million items. cash third or $X.XX. average flow onetime primarily worth to process. refinancing was a in changes the price regard million

we fully price not reflect that belief of to expect additional the share our share Given make value our does in coming business, quarters. the repurchases the

of time. deleverage shareholders drivers and for while allocation strategy maintaining investment capital to excess key over continue costs capital an Our adequate is amount borrowing in to reduce return growth to to and cash working

our outlook XXXX, to of making for changes to provided. the previously we are Moving following remainder the the guidance ranges

Full million respect business our of million is has expected We $XXX range flow $XX revenue partner million our are EBITDA with revenue largely XX% footprint is in to and softness be to XXXX core lower expectations the the change transformation updating such in million now fourth expected range into year. our cash. markets respect margin quarter progress monetization our relative to in Despite in with to efforts. reflect to earlier in delays $XXX to to licensing Further, revenue adjusted automotive CE to due to to increasing $XX TV XX% certain to shifted as markets. a range, main operating usage year The our factors. forecast due to due X to are cash we the

which which be the have of for amount deals and in a the we cash in periods. minimum the half, original forecast future larger contemplated collected not second were in First, guaranteed will

earlier of severance not million year. costs including in cash onetime business were other and and $XX transformation, costs about that incurred taxes we Second, onetime the divestitures transaction the costs, for related costs, anticipated

just for lower, noted, cash. impacts forecast our also is which as Third, revenue operating

higher closing well the year on end million expense which expected estimate, to as tax with tax $XXX expect prior we of cash is Non-GAAP Perceive is due days million, to transaction. sheet. X sale the $XX of of the QX, Perceive million after over the end with transaction part approximately now to balance the the Importantly, primarily incurred be than $X

same the at capital for $XX expenditures million. estimate Our stays approximately

X result million shares shares for million approximately of diluted to XX by count to million concludes the basic and XX share reduced our is reduced X our by remarks. million. As repurchases, fully prepared is estimated a approximately That share

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

Operator

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

Jason Kreyer

here. Cal Jason is on This for

kind know here. I the takes on puts what and the I with XXXX. you're But So of device kind of you wanted start getting things noted of just of seeing into like accelerating kind TiVo some shipments. to sounds it with OS something are broadly, pushed

reaching next million way of your confidence that I wanted kind is there X seen sense just for a in of units any million I goal scenarios implies X you've So is mean, given there hit unit your quantify upside year any to there? by get acceleration year-end. about to goal. of there the kind the that to And

Jon Kirchner

we'll Well, mark, about the year-end, both X comfortable I we're have around we and that million think hit visibility.

compared So there's the kind more summertime the shift some see later have frame in to in of been year. to and pushed certainly these when things of expected units we

that relates to isn't to that exit our 'XX. said partners goal 'XX as And call, with good that to, what's favorable we're feel coming the million line attempt beginning into good monetized, the I ever to still into of X online seeing have shifting activity. And more our as We given of 'XX, as the very necessarily on very about sight activity. we ability both that's accelerating 'XX. units it to think, while we viewership achieve So we pipeline get increased and and be

little We're well. the people market, and despite to as things but good this to an look of of industry I lot I thing a on timing own. some people the making decisions the And ingredient both their are think control don't other at as short-term we think provider, is an overall, progress we very have about delay around. moved feel So important understand bit the strategic a

Jason Kreyer

give just greater to OS. of expect a secondly Perfect. of you see And the to you're some And then it's us me, know would continue monetization I seeing achieve of these kind update as sense a -- some any monetization maybe to of just early scale guess, still, you of for give kind of tailwinds of can just markets? the TiVo kind some you but in I on

Jon Kirchner

the I monetization is the Well, relatively small. because in revenue point, part think this material not footprint still remains at

audience advertisers. to important the of need footprint certain relevant each ultimately and One market to both within bundle monetizing interesting things you that about is to are begin scale segments

see would to that engagement be indicate out out the won't there's consumed there we viewership. there. TVs that the that So are of these we and being more nothing on newly that are able monetize hours Millions

increasingly equation 'XX there kind in believe So short, viewing the 'XX for bigger, and But are all the revenue. through will the an the is energy pieces, certainly, that entertainment to choices. place of drive you in that gets get industry more path the are you more audiences as this footprint spending allow more will move optimization as time be and their bigger broadly, as ad-supported where consumers into and we in

Operator

the question of next Frankel from Rosenblatt. from line Steve comes Your

Steven Frankel

terms into want about to follow on market, up in delays coming what for previously include market that to talking I talked OS. American about some North this you're of this units an on you season? holiday entry TiVo the of in does The

Jon Kirchner

here We U.S. destined here that in a partner be into November should some around is late that expect TVs year-end. for heading production

we're to to further market. partners least the at seen of extent point. on you'll be that aggressively try to confidence I a footprint how can. have as 'XX, to every even they'll presence X you we obviously, But the to much to into think our as see U.S. bit going build remains at it And work of in we have that So get of that

Steven Frankel

you also are in some saying launch. with some well? so to expectations delays existing And partners thought just the you're of that Europe volume partners earlier this were relative as you seeing Is or

Jon Kirchner

own going we've of bigger earlier people has when around in plan, Steve. some as I happen. the as bit got hit and do said, their correct, we've seen this totally kind a certain into a time things to volumes been cases, expected We to accelerate QX, things push Yes, had in to we But are slower. on folks It the with of little had And earlier. certain seeing shift. volumes expected summer, more some some move that, little we've based we of

degree over that that think, seeing pluming by So bit X there Steve, fact, I committed dispersed Europe. And off for are to activated, the they're from smaller partners. be with our they mark, connected us. not as is it, now being, widely more, though they are, of that even it's have though it. which that being confidence it and reviews They're $X various shipped in data million The returned, worth we're critical. little maintains parts end and out high us of call a a embraced good there getting They're that working approaching units numbers and we're in even getting may are market, customers we're let's units platform noting, is units these across absolutely of are is

think So I a a good product, lot. which it's matters

Steven Frankel

Jon, hitting hit X, volume you that have units? with on partners? in winning any you confidence And your X do you new the does enough today, could X million to Or drive the depend think the

Jon Kirchner

The latter.

we to those or partners better. numbers drive need all the be able to have We

Steven Frankel

you Great. U.S. you demand? about talking are Or maybe would? in Are the thought you about And then not so market. getting some you designed decision also softness in here we talking extended, when getting talked cycles you're end about

Jon Kirchner

say we're I down in being I would game hasn't some some relative any mean, meaningful think certainly, been things demand to our some there like of seeing softer I cases. consoles continue we strategically shift doing progress in see more AutoStage. market we're as think with in businesses. our automotive, what with things share And we directional like to good TV traditional while about expectations.

going various weakening as far out automotive have think a very all and volumes you is reports swimmingly. to about that you of go seeing are there, broader bit We headlines look the on not a to don't at

through that manage to relative we're And progress. this relative have of the at the to about year trying may we're is positive had And the that. that we seeing expectations beginning still fact so I obviously think again,

Operator

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

Hamed Khorsand

guess, overhang I that's since that's is, talking been and electronics consumer a that the year, in beginning the the been year. of question first you're even going about auto on So market, last topic the

before to it actually so see start long take it? did why you So

Jon Kirchner

got you Hamed, our and allowing we've build takes, a bunch within of to for the Well, guidance remember, ranges scenarios, fact whole on to that our things are the lot possible zone expected got almost always we of in kind based our were different but puts And end TV. within of a by of annual at the the trying submarkets time products different you're year out. beginning, you get usually to the they maybe the lay than

difference weaker, not maintaining profitability later guidance. even I combination stronger and on reports But that, out increasing in around; our think what some range. be factors, expectations but turned decision the we including the is only made importantly, to based of a would be the to adjust year here the

Hamed Khorsand

OEM you of back before TV Okay. And end the are the walking one getting from more year?

Jon Kirchner

Well, we our originally We was one. goal said to one. get got that

a think other pipeline are still working partners. I we of on

and it as development getting perspective. think able are cars, is and that going from reviews coming critical its they on our which this possibility be strong is Robert TV perspective the is amongst very back, the is not deployments the thinking at function, a is looking I build to to to and But other no deployment in certainly, good news well, And potentially from product how may as relatively have potential gone we're a that, our the Little said, The partners do within product about, space. So occur join platform. smoothly. very I think, pipeline well. stopping that partners, as we're

Hamed Khorsand

Robert, away than you're mean you this chunk next help little can them? it quite comes that's big then bridge bit assuming better back and cash a a flow year. you going And described operating how I

Robert Andersen

X a things. mind, at done over question guarantee revenue beginning we customer. we're our it us a Rec Well, The what year higher the contract. described to primary us cash level the in what has of is expect the minimum generally do that we Number year. moment. kind are X duration and the at that I that But one It lengths changed? is the of deal guarantee upfront most keep of we've are as from forecasting with And the contract of so, business Rev how it it's is take minimum the of the years. and deals relationship this because very for certainty just collect the rules or such good MGs that gives the of for X And

see generally that that's the so time And period of we it.

taxes I that And estimated is pro Most impact guided. cash So I of probably the divestiture, we probably have costs, the but would think actually year. the that we they during hadn't slightly that's #X even basis. And that. When to occurred cash, these this at though lower year, non-GAAP at severance these transformation a of difference, we forma the say costs, unusual of that transaction out look on one this million may pieces are the Perceive. and business other revenue related beginning last just that we we is maybe of is $XX issue items to the primarily related

that's clarify of X pieces. So think kind how Does this? the help that to about

Hamed Khorsand

A little question. bit, but ask let another me

the If adjusted EBITDA non-GAAP a you're receivable on end sheet, given mean balance year positive, with that the profitably does cash? something next basis $XXX and accounts in million running you on like your

Robert Andersen

fundamentally doing but think increase you of assume than as from for than of in MGs, level as cash not year cash guarantee to we that our higher collect the can collection minimum next these level cash, guide be a position long I'm doesn't deals will revenue. I as our

Hamed Khorsand

million another and and in and You change million accounts you have have cash. unbilled $XXX $XXX in something then then like million billed $XXX receivable, another

trying where understand numbers. So accounts I'm that's your to just I'm getting my receivable.

Robert Andersen

mean Well, not have do well. near-term we strong. consistent been had a broad collection that I issues, as but collection, I challenges, and collections have our

that have high-quality we work with. We partners

is within that in of to So and it that will the call, billed current you receivables, be $XXX unbilled into million months the mentioned on next XX of I X/X converted the cash. the extent mentioned the roughly

that's well, think understanding worth I So Hamed. as

Operator

no final further remarks. will back for And there I some Kirchner closing over are to the Jon questions this turn time. at call

Jon Kirchner

Thanks, operator, continued on and QX reviewing you with results look financial this in Operator, pleased to thanks, our everyone, strategic February. joining and and for our We're forward call. today's concludes us with we progress, today's call.

Operator

today's Thank participation. concludes for your you This conference call.

You now may disconnect.

Xperi (XPER) 6 Nov 242024 Q3 Earnings call transcript