XPER - Earnings call transcript Q1 2021 | Xperi Holding Corporation

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Operator

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Xperi First Quarter Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] Following the presentation, the call will be open for questions. This call is recorded today Tuesday, May 5, 2021. I would now like to turn the call over to Geri Weinfeld, Vice President of Investor Relations for Xperi. ahead. go please Geri,

Geri Weinfeld

will With portion and the on Robert Armaly, questions Licensing, is everyone. and with Jon to the Robert the today call. Kirchner, Samir answer who IP of CEO; Andersen, the President available me afternoon, along call Jon Q&A on during are call be of Good CFO. Also

Before we begin, I’d like to provide two reminders.

what and beliefs future management’s products discussion results predictions, that today, risks, to changes projections in Please the statements potential risk with update our statements the and more coronavirus. about Form including arising reflect actual to discuss not intend uncertainties are forward-looking not current to forward-looking call. to, and from events on after or most factors filings, or development and based the note that new the to events, XX-Q alter that materially therefore could for statements contains on differ launch risks are these uncertainties we First, limited circumstances in our information risks today’s of or any this refer which subject circumstances. section TiVo associated and expectations company to recent but does SEC other including, and our of cause impacts Please the transaction, the

equity integration extinguishment, tax intangibles, marketable losses fees, charges, loss on related transaction to compensation, costs Second, gains we planned realizing securities bonuses, severance, refer effects. ongoing combinations and separation to unrealized or certain and non-GAAP retention including financial amortization stock-based or non-cash actual measures, which facility debt associated exclude on acquired cost, one-time business closures or costs

over release GAAP the call of our this now non-GAAP Investor website reconciliations the Investor on measures provided the of www.xperi.com. Kirchner. most Relations conference our earnings directly of recording measures comparable on to will to turn call available The Jon section Relations We be at the website. these in and I’ll have

Jon Kirchner

representing start joining XXX% XX% We $XXX.X $XX.X bought us. cashflow line the non-GAAP strong a for fully million with everyone, thanks, up during year, and $X.XX, Revenue million a our QX in expectations year. our combined to we And was million. versus Geri, flow Thanks, operating and last was basis $XX $XX.X last in free the generated adjusted on million of cash also of and back quarter. stock versus year BPS

the Importantly, of increase IP the businesses, for prospects our both a chain for supply to QX, and customers and underscoring, annual million strategic long-term these the product authorized us track existing the issues board an reflects in cashflow to put to the have from the outlook or global last progress outlook as and the stock information we most our in we analysts. repurchase we quarter, current dollars made results provided on hundred relates industry and our our outlook it meet plan recently competence year semiconductor

continue this. we'll However, monitor to

IP The to growth content set IP and initiatives As the auto various and identified forward we the purpose facilitate developing auto TiVo while TV following products IP key advancing made the is for growth stage with of customers adoption areas. solution be progress at long-term not for OEM of tool on stream, platform the a for sense discussions growth We've the for initiatives, ecosystems, these will progressing building business advancing solid partners enhanced opportunities of in footprint further and our our level, we the linear. baseline expanding available high on IMAX, and revenue move self-install perceive. the increasing

high proceed single in excluding and product efforts for to for growth XXXX, to through to any the next the single drive help business, we we mid the out mid expect teens the IP digits over digits As from look caterers four low in business. these the years

million begin was our IP with licensing IP is more million with was offset revenue us QX in year, pay step discussed than send future discussion that of over was the media reinforces with previously growth, in in the as $XX increase business. one year, Let work revenue momentum revenue being TV we business decline. the reflected our $XX No, IP the this Yeah, this up frontier IP the traditional an the we top significant licensing with providers XX our from confidence average me IP We've by business media the reposition IP XX% of our decline agreement revenue a year we in with business in momentum part the United. agreements down approximately $XXX the the and renewals leading for Sony, revenue such year. semi and Comcast recently within expected license, overall These and the baseline. baseline we Cox, annual to that companies, our as include along are early renewals year also, of IP renewed million over in resulted IP of XX% are girl TCL.

laid exceed with made, we annual legacy IP our integrating stronger year. our growth dollars collectively lower out hundreds progress to above We're the baseline semi an since strategic average on businesses focused from the revenue in millions IP incremental resulted an OTT, even this represent previously, combined $XXX that year, to in Additionally, IP merger the in million has in opportunity Canada also we've potentially believe opportunities baseline. we which annual and the remain have we previously average of Today, opportunities business. last extremely various pleased of

the to whether IP creation upon apple to continue platform growth shareholder, with churn in meaningful year, the will last category do And this value opportunities initial sell we decisions reporting year, we consumer some driven in the the from be guarantees the confident from will in to the that to market we being be these on declines contract success down the for Canada, progress engagements moving although remain expect IP was provide to industry revenue year. The and year in pending QX against round experience efforts litigation minimum licensing the litigation trends quarter updated and largest of remains customer. was business IP due company. a a consistent shift million of leading pleased the recognition litigation QX Similar in $XX.X in year down licensing XX% our success million timing said, customer $XXX.X by to revenue has the slowed uncertain. other last QX but create the on timeframe, will and and minimum of for primarily XX% necessary, revenue under And contract the year. We upfront taken relevant respect believe will QX throughout to for two subscriber Canada experience ultimate ultimate category due pay year. our a right, primarily resolution guaranteed be further it positioned this That with product squarely in are signed the product, standalone opportunity public of decline due TV and versus progress over in back last business, was to the category updates in our separation, down for that not additional with significant

in front unit continue progress down TiVo been fully would or or more smart over has make engaged as for have embedded guarantees on to never exciting on business minimum per team year OSTP been TVs. slightly Excluding we stream a year the

significant saw QX over stream activated ad front, quarter, of plus Additionally, launch to stream quarter, Teebo T-bone other with footprint. TiVo our service. the we and TV. quarter opportunities increasing the of the footprint And explore our monetization we during continue service number stream. flu to the IMD Amazon's Xk platform expand through expansion free on the increase One is of content the supported

added CBS which offering paramount as We plus as such services TV well Fox also ABC, and as from includes everywhere, NBC.

Xiaomi, the enhanced in with connected this car enhanced commitment the later ecosystem, which category we connection year our hands during IMEX the to stream includes a an revenue And we agreement provide the a quarter, and moving major in key We'll launch, significant ecosystem details constant signed TV's this multi-year importantly, service, on this a $XX which return encoding will for north support with in to a was tools, see IMAX we So signed launched is models during million cost-effective strengthen libraries to to with up Xiaomi. content. enhanced continue IMAX to film quarter, easier growing more for technology XX% the agreement year sales, IMAX. over will released enable because we automotive episodic new On HD enhancement of radio XX year update and America. delivery. with which a

for and In am, addition, broadcast pool stage. all the we've wall the FCC them, new nine licensed stations digital following auto GTS digital to

and continue build out broadcast to our content infrastructure. We

and agreements for apps broadcast place new five Europe. Europe. developed we put aggregation stations manufacturers, car Asia We important in with engaging While XX in in

will companies We and launches. use the a features discussions auto product. And Teebo and in global we top global Asia, U.S. major facilitate of now to stage DTS which in five is are in live DTS advanced stage also and The and auto licensed metadata platform vehicles in regional XX the Europe countries. music streaming service, the with auto regarding

interests different As auto features. companies and have

to And occupancy and this cabin each They We later expect monitoring on global But vehicles deploy our trucks auto target our commercial in for solution to ETFs are this roadmap of be a year. on engaging discussions, continues in further platform. company are driver launches system monitoring confirmed our summer. launch and Asia. monitoring

over in demand over also to as customer first business TiVo increase operator increase most the by increasingly to quarter quarter rapidly of to TV a capabilities chides as offer to vision churn deployments Android for important base partially this in declines, subscriber the business. video safety shifts to our offer auto solution Lastly, be TV software, self-install revenue option chosen have in TV their the our close service IP TV allocated that and growing the we was a installation We the XX% broader strategy computer IP year RPA We TiVo and pay plans percent continued customers legacy as to cell industry the with of increasing adoption mark X,XXX this where the hundred TV the and time. quarter quarter currently of year expect and for offset revenue during TV, of pay partners in of self-install our we systems. the down have on part as small but business value continued design consistent due process to our quarter grow higher based achieved IP to the services customer under year technologies, moving over business deployment favor of end million trends sequentially expect industry reaching shift to ISO car in a revenue paid contract declines $XX.X development important of solutions lowest X% a TV and with the quality subscriber to development and IP DTS an for sense milestone our of be certification

Additionally, conversational your extended voice, insight during pan. range though advanced provides sharp Vodafone them quarter program sharp agreement for analytics. corporation, content of agreements the including TiVo discovery, interactive licensed Vodafone products, guides one with products, to industry's the the and access a The of renewal most throughout to provides and data certainty viewers

our on select Lastly, additional and beta track through developing contract integration solid with progress are signed We've working customer product team perceived plans. ramp enter with and and an our made to production customers. is tools

our customers few on products the perceive. over But and turn market continue are and to see into keen for discuss their interest to in Over with to Robert, our and integrating to our financials. months, excited solutions the Robert their that'll products call designs, the broadening addressable we work solutions next

Robert Andersen

and fully previously basis the discussing as and GAAP comparisons non merged and numbers noted to are provide combined both order in for prior John, on more a periods cash-flow Thanks, based companies. presented GAAP meaningful

various $XXX.X with strong and first with a for plan the was which on a track non-gap million, for me results for begin is Let it's the quarter basis. start the quarter our internal revenue financial on quarter year

lower $XXX for in million about XX% share outside stream reduce and reduced paid per were cash a spend the the TiVo. in allocation quarter, with expense. $XX.X $X offset number as higher lower non-GAAP was year cogs Using year with taxes the was personnel methodology of to million by $X.X million. the expense were basic $X.XX. Is change than non-gap quarter merger costs in million expense, excluding million the cost costs lower $XX.X sold as of ended reduced or shares more Cash personnel than first Xk and goods total tax outstanding. over quarter the it million litigation with in hardware We products due XXX.X connection earnings XXXX expense, operating down Our such

common of million We As shares, bought balanced stock $XX Jon shares $XX.XX. Since for X.X the repurchase $XX our total have closing price million average million of an we mentioned, repurchasing million. of of continue with spent quarter, merger, capital a to our X back plant shares, we to during repurchase strategy. the consistent allocation yielding

balance the we with the cash million and sheet, to Moving in quarter investments. $XXX finished

down paid a Operating was cash million in the interest from million the quarter. collections, million changes for lower year-ago $XX.X expense that IP. up reduced also quarter primarily capital, offsets during from million cash on fully than spending We $XX.X $XX a combined these basis, and $XX million more tax $XX of in semiconductor working from flow

and for flow, flow spend quarter and separation is worth plant not million lowest of $XX.X cash our throughout flow the linear was free the quarter $X.X year. related cash merger property, and for costs. noting being that typically of million adjusted Our cash flow Adjusted million. with equipment of adjusted the cash year, the operating the reflects $X.X first It's free quarter

cash During per Xperi common the dividend paid quarter, $X.XX stock. of quarterly

the Let me year. outlook our lastly on comment for

million, our being in first the revenue $XXX pipeline the range of strongest we with our quarter. strong and quarter million still the activity, see Given $XXX being year QX of for to

revenue mentioned, chain regarding from reflects constraints. information we most customers semiconductor this and have analysts range industry Jon the As current global supply the

associated resolution, the to However, resolution IP reminder, of licenses. annual not given uncertainty does Also, Canadian with we monitor semi in timing as the include we’ll outlook revenue litigation execution as of continue of or inherent a forward. move large this the

difficult quarter On side, while guidance. Also, certain expense deferral consistent prior to $XX to be expenses the last expect approximately due expect be later the year. of had year, lower lower million than to expense currently we we the first the be to forecast, litigation annual expenses in our with our can year. We the spending for significantly it to in

expected second quarters. is expense few ramp-up litigation certain the additionally, in investments R&D Although half, next the to over the occur

step-up prepared As reaffirming the quarter to XXXX on strong each That's outlook remainder the throughout a given result, earnings year, our we to call. expect the we’re expense our last communicated the That our year. remarks. operating full-year start of concludes

the your now open Operator? Let's call to questions.

Operator

[Operator Instructions] you. Craig-Hallum. first from And question take Thank we'll with our today Richard Shannon

Richard Shannon

last baseline I here, get upside of maybe in to this of annually. mentioned taking potential you’re for either Jon could here. a qualitative little million at or about, questions even more think some hundreds quantitative call few I the my if but $XXX dollars Hi, with to thoughts willing I'd could be talk about that bit A low guys, your IP here, ask things, you thanks on millions love the

part could of and give of that and be ultimate mentioned? upside You you semi right. litigation which when pay-TV if ones sense the pay-TV have got up IP, hundreds you on call dependent, that you of I've millions Can Canadian contributors degree isn't that, bigger that the could low us a happen, which also know in maybe that this both to to of OTT, split timing visibility the to I

Jon Kirchner

every resolved Sure, your uncertain. certain Samir day, I very going you of so big about the timing think of space getting good some is have in Samir? the it But address we always picture, ask questions, the feel pipeline. IP specifically to And to because I'm things so

Samir Armaly

the we areas. pipeline, each We I really Jon growth we individually in will contribute feel Certainly, that good, that to one said think three think as meaningfully about all identified.

with beyond what the of sized really had the any litigations. said respect to opportunities we Canadian haven't We individually

operators, believe the had subscribers aggregate it we've contribution we with a mechanism than we aggregate, from recent the annual Comcast Comcast pricing what revolution, we received number because that different our and is at have will the all smaller we of smaller opportunities large be ultimately. we do some resolve Canadian in while in that the the as Duluth Canada As said, of in a

large confident excited at Canada about other So well. as and opportunities we’re the but very

Richard Shannon

from what IPTV improvements A some here. about on Okay, helpful. to great. get industry but great also year? outlook out your And of first and to start kind What's understand talking base activations going even quarter. in pay-TV flatten when your the in the business this the ultimately, here, pay-TV does that some you're That's make small you're dynamics Obviously, certainly visibility question improve? business, or exposed that forward here,

Jon Kirchner

really a hit way. in efforts coming a deployment think hold truck out it when part pace positive possible. depends of were very Richard, And think I rolls certain that on on adoption, I of the our customers because COVID think we're in now of put IPTV I not lot

have think service. to already we booked the that, be of quite looking is in I business that going good we're a bit news to

think attractive we growth. us and broader that I to meaningful So market to generate an be visibility, is have be we able should for this going

offset provide are secondly, well what an the we've I with to And the that But be adoption, of the exactly is and specific among pay-TV reduce important perhaps greater growth out, business not think timing that offset. you're I going is driver customer seeing as our and base. bodes prospects customers, think point key forward. seen differentiation I only IPTV that the monetization is think and I for you question meaningfully than of grappling broader but our in the we're a also traditionally, still across decline of some IPTV will significantly as a exact potential an just think what looking element point

Richard Shannon

there's any material for queue in in Car Connected you? wonder segments AutoSense that picture having the here. context And ask Last about in way. this one I become is you designs, your When think quantify think quarter, Okay, within big update that's question number your for me. does can described all a you I XX way AutoSense back I'll we today, if of any here. jump and then the

Jon Kirchner

get We've talked timeframe. advanced ‘XX the systems, ramp into more the potential safety as you ’XX, about of accelerating

activity first the continues. automotive release from OEMs year. in and I this on level our the this area, in a around see schedule Tier-Xs the we’re half our think of think amongst think of And and here customer back I I partners, both leveraging solution to

the information be give may exact position come when very next a I this to the as models the timing to in visibility. without more accelerate think doubt, and now. customers And years. continue are driving going in safety industry think cases just primetime, But I more be see may about to a market, We're will thinking the standards think is think about we'll more experience to I realized innings grow to there's trend over get are many we of five natural, to think you we this because So better And seven the have the this. materially impacting how I it's safer. ready advance early within There's that really in-cabin broader technology people desires experience. that people to make in I auto for

Richard Shannon

fair on, XX ‘XX ’XX, of of than Jon, mostly Is the for is or timeframe these to ramping implying of or the seem kind rather in the a the you kind Just timeframe the in designs, one be like more maybe one whatever half second a slightly number are of deployment? today year? the ramping follow-up understanding that sounds than

Jon Kirchner

that wouldn't fashion. it I necessarily exact paint in

our ‘XX. begin models to hit diversity interesting as and then greater the those beyond, does and is, year. you systems. more certainly, start get I that the And acceleration But into amongst think see this of in to think question see multiple I offering out, course you'll you'll ‘XX how

Richard Shannon

of Jon. Okay, that's Thanks, jump out helpful line. I'll perspective.

Operator

will Khorsand Our Financial. Hamed BWS come next question from with

Hamed Khorsand

for you Wahid actually Hamed. This taking is the thank Hi, question. for

you. could especially is And The everyone about you're you importantly, constraints customers question. talking a is big topic wondered the how big quick more your how on But supply is ships. I it's talking that one Connected you. about news, on provide Just Auto? color if Thank impacting impacting when

Jon Kirchner

Sure.

brands at base, mind in it say, extensively around keep and is factored sold So, an people with yet the a growth percentage to we States, number, we're business thought less world, automotive in going our from feedback opposed But think range. I and to have a is which few with from customer all beyond we're would the of that in United it doubt, so indication a an see, in overall without stay think, this while closely. the points, have the, respective doing automotive as would impact to least think will it'll I it's materially think more been guidance business business about I we’ll thing, bag, the But and our global need recovery. the already what by we we've far impact I size evolving to our doing trim mixed

Hamed Khorsand

you. thank Okay,

Operator

with [Operator Instructions] We'll hear Sidoti. from Matthew Galinko

Matthew Galinko

could region into I around afternoon. detail think service. something? we And you half provide Any IMAX Enhanced or of to are the mentioned that of good hear my integration or waiting Hey, question, service, streaming color first streaming reach the until a additional today you maybe back

Jon Kirchner

I think I as be it's I North further significant to in in much But issues. that I the ecosystem. IMAX the more share as of can believe, share not that because advancement but can that its development Enhanced of a said confidentiality America, customer it we just do initial relevance will relates

and launch. about So stay say it the future in we'll have tuned, more to certainly

Matthew Galinko

the stuff time to what's market to what's product for the there? or the perceive the sets. to your to similar moving that customer And a least given do, on Great, take control, where next out until win, but versus I few waiting tool then think guess customer a the get do it'll you’re and I need customer from win I referenced Maybe think you you maybe something shelf? guess thanks. you guess long a months second at iteration building product? motivation the And question, work how there's I Thanks. today of beyond Obviously,

Jon Kirchner

in to products. I has from incorporate our talked platform standpoint, looking differentiate anything competitive that been easily availability their think a tools constraint. their marketplace, right, independent a into the ability in people's think to once about customer our I products of terms We've the

available shipments those will early the course this for But in So that get we see you year, year, of opportunities ship to components, next the develop marketplace, of is you product expect certainly think other I piece From extensively, I later of and not this, we're by build open-up folks think, the course certainly that as tools in been to become products. I year. and the we've this these one in already more as and in ’XX. with chip now product expect ever you'll working quite some looking ’XX out before, that some customers incorporate bigger pipeline would so people elements see a addressing to and are puzzle, a we're point all given of the as smaller to need to of into

be out. So the But that we to we I laid a good development, large. about is what we'll on great we going that where feel within in our incredibly goes. about remains think expansion, have schedule it opportunity general, market much have And control, think, pipeline felt to factor very, we see with very isn’t to clearly technical proceed the pretty

Matthew Galinko

it. you. roadmap, And from is three a Thank it two like slide Got step. deck, stream TiVo then going a one your for looks your step me to on last

And that perception out have you changed that way that strategy? learned sort from I'm of got What along cut curious kind what of so the process? your of

Jon Kirchner

where a is let’s that platform be dongle a TVs, thirdly, done would the the a live last interface OS on into be preferred think the the it their and doing Google discovery approach, for embedded changed live provider, attaches beyond three OS to offering much one's And we’ll way all that choice reasonably platform. we the of sole we're solution, out broader the to but as that and lower embedded engagement. that really product, and user a search and originally planning originally has bigger phase notion might intend going a interface level into TV. so top came ability said deeper which go eclipses of kind it primary of then to fall, otherwise really combination, the What into I in have on say an Stream we're UX Android they where application, we approached get around broader around an so lot alternative on starting XK is a embedded core moving level Sure, their content where the and business, with

getting a so is from really which in directly Stream solutions deeper embedded on working XK jumped our we've level. TVs And to aggressively in into X Phase

happened, is involved very So ongoing it. And continue that's to engaged therefore and the drives think essentially have around have what's I monetization everybody are that greater higher solution continues quite pretty that that work for well, discussions and we engagement, think unique a partner we in ecosystem.

much efforts And that as timeframe to at only about so good really our Phase the the think one to into very are that, move we that the us in as can. feel designed try end X, I day, efforts of ongoing accomplish get not ideally to but

drive larger can we monetization build of in around engagement and footprints So that. devices turn and

Matthew Galinko

thank Great, you.

Operator

will Shannon question a with Craig-Hallum. final Richard be Our follow-up from

Richard Shannon

business year. about you expecting for thanks guys, roughly last talked your to on taking be flat this Hi your follow-up. license my call, Jon product it

still that then expectations at that this you does that think possibly a us can and for And is point? there out business support you? that about You've the product help year case that growing? be having overall being would flattened the viewpoint Is and maintained your help flat year, guidance next and it maybe

Jon Kirchner

handle end state of based on play. in that look as product we I things, we better one is, question how towards their growth, the a expect we'll these get think be that on we out just think I go growth various we're is the in do working and year much people, in on certainly that ’XX, businesses in of ’XX, able the will beyond over to and our

perspective strategic economic well I short, both year. well relative we comes, that when we interesting very, year, have as ’XX. So, watching way be forward discussion, plans And and as to we’re our as just tracking very way, in I for into rates changed I remains a strong. achieve think a very it'll And in ‘XX, with direct in time we'll think this outlook our good look very an execution, growth going think of a has

Robert Andersen

rates his comments. Richard, Jon growth noting of some maybe mentioned the that in

four out, As expecting the next the business. we for product years, CAGRs look we're mid-single-digits to over in low the teens

growth the and single the in business. any for high IP to Excluding Perceive mid from digits

Richard Shannon

talked is as IP last quarter on comment, for get half first spin-out helpful. for you being we the one Last Okay, this last close just ’XX in that. that me, question or call about

would next as that in what about we How the expect should of to that expect we should quarter? still And end to something the more plans expected timeframe. year? the the towards -- Or that more confirm there? Just want is hear definitive

Jon Kirchner

Yes, and you next you'll as first more into of fall. half to hear year deeper get

Richard Shannon

Okay, me, great. Thank all you. guys. That's for

Operator

conclude now over Jon will for additional closing today's Kirchner to I'll conference remarks. any question-and-answer or session. turn the That

Jon Kirchner

joining for their Thanks, updates operator today's I to for call. forward dedication look plans. and operating I employees our executing towards everyone to thanks, our on strategy want and thank providing over today’s technology Needham, the presenting at of and at to Thank we’re JPMorgan. Baird including this the upcoming you. you and conferences, call. media coming see months Operator, concludes hope many and

Operator

you concludes for call. your This Thank participation. today’s Thank you.

You may disconnect. now

Xperi Holding 6 May 212021 Q1 Earnings call transcript