Xperi Holding 9 Aug 222022 Q2 Earnings call transcript

Good day, everyone. Thank you for standing by. Welcome to Xperi Second 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,

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

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

would I to two like Before we begin, reminders. provide

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

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

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

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

call. for and quarter thank on you, Thank us second joining you, Jill, everyone our earnings

on the IP During both we product our continue initiatives and for businesses. focus executing against growth to our quarter,

standalone that in positions to to long-term continue as and our made of compete grow for we the better these each we exciting fall, entities. separation plan upcoming this progress businesses As

this our expected first TiVo our win. landmark signed OS we side, product with SmartTV with for launch validating mid-XXXX, strategy in the On customer OS

European our announced for broad solution which global all technologies. launch we and automaker over its of OTT program with first value We and platforms, OS our expands we leading won video offerings. addition, of the expected competitors safety automotive, solutions, and successfully deployment scales In TV TiVo underscoring and major the our for TVs with band acquisition technology for won a in accelerates of single a enhanced Vewd, XXXX. connected a camera in-cabin of In against global provider program across OMS of of this large our growing market with list further the the vehicle hybrid

once we agreement OTT side, and a of demonstrating portfolios, and with media service significant applicability leading and consumer again, the semi IP signed the IP provider, longevity a the electronics IP. Adeia's long-term both covering On license

our While good the forward combined move growth that inflationary to quarter strength due market X% million, the supply have the as of chain and demonstrate On the on were macroeconomic results total and companies. and broader an IP continued basis, to ago from environment we separate a as period. year will a $XXX representing and independent our second financial the be long-term for trends, business factors challenging positions, challenges model positive impact was quarter revenue basis second our product throughout

cents. $X.XX was share per earnings non-GAAP Our

as years, he long-term. a over I'm company the announced CEO of is we confident quarter public and at audience become over Having experience drive and X Paul standalone worked will separation Adeia's serving as Paul the leadership Davis has with the for the Adeia As Adeia's right during skills currently President. to success

management team. have Adeia we out as of Jones continue the CFO appointed to We round Keith are the executive pleased to as

well-positioned companies to are With these forward executive separation. post appointments and take other our both teams key hires,

me our on IP Let call Paul? business. turn Paul the update to an over provide to now

the join Adeia to and independent his experience leadership professionals, business Adeia, the separation are very strategic to this and Jon, licensing Financial I'm kind traded take Keith on bed have am we introduction. executives thrilled businesses I Chief of and world-class Chief Officer. team this the of leading leadership publicly Executive Thank At role later the it IP roles have company fall. at public semiconductor for platform, at driven innovations prior team IP diverse contributor for and IP electronics, has consumer Adeia's you, world Keith's continue size, Adeia. agreements Jones focused under built Adeia our that key excited as has that a -- patent becomes Adeia licensing perfect one and licensing as in a IP just to acquisitions, our through complete been in of as at portfolios quality a and renew to patent through by and media assets The license and investments management XX,XXX new and with pioneering entertainment, grow IP its innovations. social semiconductor and internal are ability principally companies. media, well will sophisticated media, leading its portfolio portfolios. breadth strategic to targeted of ongoing patent on relevance as

a semi noted, Jon OTT service the the both IP covering quarter, a and significant portfolios. leading media we long-term consumer second electronics As license renewed provider, with during agreement and

terms, attractive and and beyond applicability the IP renewal market on value of growth IP OTT expanding of completed is this our which represent in the traditional Pay-TV. proof another our also was portfolio. point underlying Importantly, It

hybrid as for this direct enhance their multiple technologies industry. and product key Adeia's to is packaging signed the become executing a bonding in agreements, advancements, devices for government other and bonding by in including Advanced and those of the license new new with generation recognized for agreement semiconductor commercial SkyWater which advancement technology next agreement. also We technologies, license access performance have and applications. with technology enabler new a pioneer forefront Technology hybrid at bonding renewals Adeia’s SkyWater

round covered Videotron's Court Canada Federal of in platform. of the issued of its June, our which favor in in Canada, to litigation, ruling legacy Turning initial Videotron

announced, and is In intends August. Bell judge to Telus are all continue appealing case, this the Videotron previously which same with of judgment we As ruling initial including issue its court that the explore the end as the by indicated our matter, options, to disappointed and our the decision. before

to Canadian industry, rounds extend expected litigation based in in we licensing remain of against Canada. agreements business license, renew XXXX and None reminder, our last the remains filed continue in the Videotron a our Canada. value these outlook are to impact enter to we we market long-term licenses guidance, As matters of strong successfully parties in or each second as confident IP opportunity the and litigation and of including across Bell our IP with year, the of

accomplished separation, we in this for And As the prepare growth Adeia opportunities team year. the proud what of of has look front us. for I'm very

semiconductor world-class I We cash both deep will and have built an engines our to back and consistent licensing the media flows, innovation call and executive incredible in IP with leadership strong platform now team an turn Jon. businesses, with licensing. in experience

Paul. you, Thank

company. Moving the growth continue work product we as independent profitable to business, as position our an to emerges to business it strategically for

continued value all strategy solutions, IPTV as on with at product increasing During service declines the our continued offerings business. demonstrates driving execution growth IPTV Pay-TV which adoption offset a deployments Hotwire over our include This video subscribers our progress broadband in second category, operators guides grow of to which long-term our includes our higher such classic of rate. to double-digit quarter, of

hardware offerings. Importantly, and that saw of Pay-TV suppliers operators mitigate we category our continue due supply product product with help chain some availability, new we our to and softness add to expanded working Overall, ongoing additional are with pressure. however, issues, to

In successful quarter devices consumer comprising customer. category room desktop; primarily by imaging continue a two focused the mobile Our bars, contract resolution to is and the home chain on in the primarily a mixed with consumer consoles as comprised software and product imaging we our customers second sound second our dispute second support environment expected solid first to and continue which and platform living learning which in impacting electronics, business, large solutions. machine Perceive for platform, until of they models and our continue with is expanding chip continues mobile not is being create platforms, base mobile the technology to to chain realized XXXX. a of we well. audio production relief an support machine game customers. potential visual on datasets. in Supply pressures testing audio Meanwhile, large driven engage That learning electronics go the tool of testing extensive with engage the their Overall, of and

image and Car, array issues, an environmental of the wide a future in ship That to product build XXXX. first and sound category, environment immersive to chain better technologies that not In sensor third product the the video understand to Ergo and to to platform and emotional based also supply state we're discovery will insights music the content personalized better behavior cockpit consumer content. our expect products. and partners video, advanced help important our brings working we currently Given leverage current provide OEM of cockpit until create entertainment Connected and context, do

get monitoring on this long-term. over signs cabin we'd supply to with and But by models meaningful XXXX like XXXX. next and to beginning us in vision its gives sales our on is see. stage vehicle to automotive growth car all auto camera with and strategy just quarter XXXX further forecasts, fast safety a against this competitors the manufacturer continues Overall with enhance solution European confidence the issues is improvement resolved. our as execution as Our was Car field, another to well constraints. choosing the as of recent global supply we and the way not down sets there in the occupancy by major horizon, its strategic Connected well consistent chain as growth single progressing major across the for win, win anticipate recovery generation evidenced be program XXXX chain the to in are relative This that automotive volumes impacted be IHS around

drive for several is us revenue final and category the is growth next fourth to over the platform, media greatest Our which product expected years.

footprint. Smart platform an the We supportive downstream positioned can multiple revenue. higher XX% the the like partners partner share uniquely provide strategy engagement markets Our that expertise. media automotive categories seeking are from components of serve is ours, is target deep estimate and platform independent nearly monetization expansive product platform and is truly industry a of domain independent an and a Xperi platform in provide each searching an that and market to user draw with for Pay-TV our provide of where to experience, TV, media a large extraordinary to

platform capabilities TiVo supplier. embedded underlying our TVs, smart of OS and TV look through an becoming operating Vewd, goal be Europe our As to recent early our some our the for pleased of as OS, accelerating technology an important middleware toward example, first progress platform technology approximately provides to of can We system installed acquisition base monetization stack, and have signed for leading we adds Vewd ahead. SmartTV time. progress media very million our strengthened we're our that offering further independent XX customer a for over product TVs in enabled and our TV components

has a very of benefit early our the Importantly, acquisition and the capabilities our feedback positive been customer as domain complementary combined expertise. on solution, deep customers recognize

acceleration Our currently being further independent an and platform updates. for important is Stay been is is tuned point. strategy executed anticipated, long media reaching on

prospects their sharing fall, to hosting our continued to Xperi more in our Investor both look I'll We're this progress. strategies. financials. future businesses, Robert? Day about separation With growth the approach September, and our long-term where to turn the we and forward that, over we Adeia excited Robert for and IP will extremely discuss into insights be call late product both forward go and an As we

Thanks, Jon.

represented resolution provider. the electronics was consumer quarter up to due me second for in to the the increase of business revenue $XXX as of our long chain The year XX% $XXX offset with both received of quarter part our million OTT quarter. ago second standing compared principally in Car guides categories, X% of respectively. revenue issues service million, demand financial from a dispute in which the customer, as category, in upfront the that primarily begin of period was quarter, across one-time consumer healthy Let value from the and classic IPTV up more attributable inflation generated agreement our businesses. churn particularly than reaffirming million, Connected second as with mobile consumer categories, of due impact down within product last of Pay-TV results from the technology. period our a occurred ago offerings X% product persist from year a $XXX revenue product Supply as Total period, contract million, year contributions and of for million Revenue renewal from imaging $XXX on with a imaging $XXX total year the was electronics revenue, our many was of long-term $XX quarter an and XXXX, product X% the leading IP the IP and service the to in our growth million in ago million of the the deal the business. $X.X to in metadata in by QX product revenue well

contract driven revenue, ago consumer by resolution. the in million revenue period. total category, to electronics noted dispute from revenue in mobile for of the imaging $XX.X the the $XX The increase Moving XX% predominantly accounted QX year product of quarter previously was up million

growth As a year the for consumer full to in overall category, electronics expect we XXXX. continue

Car will beginning MobiTV expense in interest slightly and million longer debt. business the was from income We for from up quarterly period quarter, closely are year, of for its million, up $X.X million, was our standard contract Connected the more and costs was the adjust Vewd from category. year renegotiation year-over-year, will macroeconomic to million revenue of half to GAAP as first second benefit of impact down reflect product this operating current for costs, order while accelerate to a $X.X million EPS On million, chain million, for $XX final QX in XXXX. created With with slightly the These our increased cash calculation. in from year. rate the of category of $XX.X IP conform the the And now this cost ago in XXXX. our to by product non-GAAP the $X.X a that stream of the rate QX down interest use rates in one-time to Media tax million basis, million, adjust Xk pre-tax revenue non-GAAP personnel quarter Other was variable from In down we million. adjustments. $XX monetization direct and achieved quarter higher $XXX.X more environment second acquisition $X.X GAAP from be growth of our second challenges. for -- last than compared expect personnel category, on half XXXX for as company including in our up primarily net to measures, practices no last second ongoing the the the Platform, GAAP -- non-GAAP indirect from higher Instead, $X.X income Non-GAAP separation. the Our supply due improving quarter prepare was tax expense will to QX due the for offset category a quarter adjusted expect the this of XX% tax company was to $X.X tax revenue we month, XXXX. growth acquisition income effects non the various last

our typically cash prior before annual a basis, $X Given against non-GAAP forecasting XX% is of number year. tax is the in rate million than million guidance for non-GAAP XXXX that new an $X tax. an the guiding we will higher estimated range done year are the use tax remainder at to on the full of This methodology tax using result earnings

bring debt investments. Operating of finished quarter to balance QX $XXX Moving down collected. to at million another XX XXXX. our for $XXX was to $XXX customer paid have cash the with quarter the million, the end flow that million balance debt cash down as quarter at sheet. during million June Net million a of $XX.X primarily $XX.X end of debt million We from quarter We from down and due been $XXX year million, in the XXXX, $XX.X quarter ago. XX% was billings subsequently significant to

of July make business we as each we common of not dividend needs on acquisition this per as capitalization for paid prepared any $X.XX X, the did quarter and of plan stock for near QX, of cash a we share purchases During stock, separation. Vewd

terms the primarily acquisition. Vewd that we In year's financial the certain are making of related to are outlook, updates

$XX For $XXX of $XXX an by million our revenue, we range are updated raising million. the million of end to lower range for

to are $XXX by range due operating a impact rate the million estimate We million to million the $XX million midpoint increasing the top for the million, our $XX with of to increasing at expense million expense are increasing to cash $XX by year. non-GAAP to a of approximately annual our incremental end to our by the $XXX are debt of lowering from million million on purchase, of $XXX debt, guidance operating $XXX range interest approximately interest Vewd rapidly primarily the we along $X rates variable and

cash lowering XXXX $XX tax Lastly, million. $X million expense an approximately of our to we $XX range are by to range updated million

As tax metric to noted want prepared be provided using earlier, EPS. we provide in was the That will to calculation non-GAAP financial year. of that concludes we remarks. the Yet for a cash visibility our our not

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

will [Operator our question take Matthew now Instructions] first Galinko We Maxim from from Group.

line ahead. is Please open. Your go

Thanks good for my taking afternoon. questions. Hi,

get looking process making do about think found XX% faring Jon, much how in a how after? think that those something you're And you that platform. how speaking portion OEMs realistic number? And now? of the you talk independent could you market think, I TV are for around of OEMs? Can that among an initial decision you What's you're to said you the you

Sure.

X Tier an open brands. are amongst way take, about Tier you is the live volumes who that you solution and people looking universe, SmartTV it end think the And across own about think user Xs, to of providers. think monetization we at you in some their broader for I retaining take that So the in direct And chip kind with participate to in relationship user ability and equally seeking various customize are, long-term. over a the I end their customer think experience, leverage the interested and the flexibility even have

progress. TiVo, opportunity TiVo are branded So, by the of the part are some Vewd got it. of which of you therein Obviously, we we've in opportunity both leads short, people And that see looking discussions, meaningful as TV. user an think first term interested the experience we think, post, I end make OEM millions greater best-in-class, model, to agnostic can many content necessarily in for tell content capabilities, experience a acquisition to where XXs for platform and I I people ultimately pre powered in who looking and I our not continue think, monetization. believe, units, discovery engagement and our And personalized is longer in that really lies, the

with mid saying, of originally or consistent we supports news So, what we're 'XX. multiple And is brands. We a 'XX, by X Tier been in to progress expected about 'XX, made. TVs this our TV and validated we've excited more I strategy moving win And we're believe timeline late, that we've to that that up customer with the first kind follow. think first leading now

Thanks. That's it for me. Thank you.

Next up, Richard we Craig-Hallum. will from have Shannon

line Please is open. Your ahead. go

you specific just remember Well, opportunity but, I even actually question. my XX%, he Or for source basic Jon? hi, see Or what asked, from you I characterize work XX%? here. was what to how don't that follow-up or same to on independent credible, Is work Thanks And if that a question the for of your as again, upside this taking that here? is you? this this guys. would want own that?

all it composition with based in done market TV of discussions estimate X. as broader let's we've -- That's as call different well data, some around the our in the a the number Tier the on of work

our we But over to be there'll where -- react, sit out very we that penetrate continue broader of this we ways from that to function consumers and as to positive represents clearly allows the turn, look how portion we think user think to are, market. -- of where a here how think about a in for even I experiences I And we and think, experiences achieving and context universe, complementary relative in kind with today, So to on continue of program picture, a time this that ad will goes meaningful people it'll opportunity be sets. as greater growth most roll when of ways, drive we are an stepping where you the business. back importantly, activity, where big that align very us which ever

viewing Some you're the data what or seeing of linear I've hours recently OTT TVs elsewhere. last only those more XX% yet live your less says of that dollars Connected that, ad seen on and versus TV, over X exceed months,

statistics So X advertising, the next think when you We expect in others experiences. to the growth at OTT based tremendous around years. around AVOD you many look and [indiscernible], and and and X about those in

meaningful, we're into think value And a you really it I attractive. way where is of and I for opportunity is portion capture going our large is if proposition. in to it, set the us but space, a even So think to moving very come down quite that a

feedbacks been the good. And so far, very

Thanks topic split exclusive quick Okay. wins I'm to on SR exclusive but expect could And over TVO Or just also that. some of they them are in the follow-up box, all you assuming manner? be per for do OEMs? be your here. a

that will I think other stages the availability people our of depends program, it's factors. early think and performance deals expectation reasonable and of on bunch certainly a particularly whole the multisource, happens a and thereafter, both I what

Okay.

and competing you loss and multi also, in And rate win the specifically questions starting here, you some platform. here. at XXXX? to point? Can then two win maybe you the the do Can for you your you OMS in camera here with [indiscernible] this nice win kind across talk topic more Second OMS? termed Are Maybe announced of there? about a win OEM single win talked your about a a camera expect broadly you -- entire you

We are.

that is up is I portion a about necessarily, I say But monitoring ways. -- feel which of along of drive for a if monitoring, than category, And of coming a more straight occupant We various people I'll process. which how different older we OMS. and you solutions. do OMS, doing think our evaluations what we're driver lot which describe for call to would are a are one good others currently proposals these about with as basis with really lot of figure full of ongoing. there's to we're to those out lot this having, so there be I efficiently, innovation, are have rate which specifically, slightly over There's of part how having then would about there'll I would say think very the led I more of follow. ideally and distinctly has from camera, a And this discussions time, discussions concluded, there cabin winning is to a that the -- this various engagement And -- in for win. on wins think based various

Okay, the fair enough. I will line. jump to guys. Thanks,

up, Hamed have Khorsand from Next Financial. BWS we

open. ahead. is go line Your Please

Hi.

have year different you the as product into well the customers? the How have your clarity far do just on with off, half the categories. as first So you second of conversations

electronics. of a pressures kind from issues, about shift approach, chain cautious in transitory the I half, kind think second I when shifts up for and talked year, we product the And that we're expecting of of the year. spend be we've post-COVID on I'll inflationary when we're to the look business, consumer second the supply reducing single the look priorities, think the take their each we digits expecting given at half at

expect on was product year bit of IP for revenue QX, in probably think, which the side. portion excuse the principally grow me, Microsoft, of cautious the I second half win to in that overall. the Micron 'XX, results substantial overall, So, business a On we

that consumer in price you adjustment the OTT is the and this revenue was Okay. lift with there then big electronics coming with in this how a a of renewal? provider, And renewal And won QX?

is are of that confidential in Hi, some in were our periods a deal, obviously QX. hard part particular, was it's but that for prior payments in On bit this Davis. QX, we Paul in there impact nature,

As it baseline QX, of was goes it our forward revenue into part assumption.

as As baseline that revenue million and comprised was renewals well. $XXX expect this also of contracted renewal. a And we

our was that. within expectations -- it So on that within

more any expecting Are there renewals year? that this you're

of have renewals a -- we pipeline were We …. that up this It do makes yes. expect to do year, close that

my ,,, then And

Go ahead.

Sorry.

-- like going the as question I what capital the ask once was concerned? fine just far to as tuned the that’s last structure company have look was, you will separate

the We that -- term business. would would Vewd the remain the incurred and with with Adeia that separation did that I are loan product that -- go purchase at we to

you. thank Okay,

You're welcome.

Next Stephens. up, we have Nick Zangler from

Please Your go line is open. ahead.

any hey, Congrats regions OEM. any us that Maybe Just might Yes, TiVo tell can be be a at produced expect curious, win you the system many there I'm win on about might relationship TV guys. to you operating all? What available? details more how more TVs on this annually? big here?

Sure.

public next prior foremost is expect do become shipping TVs year. this to So I first these that think what we to and we share can

this be So I will fall. think more information available

sets note. provider North So focus it X leading Tier I America. a TV to that And a brands. is TVs of think is multiple under important The outside these that's is makes

fall. forward, we more expect tell information here to share as as that's think you I I this looking to able be but So now, much can

Sure, -- are the OEMs OEMs like OEMs then TV then the that utilize power to sure. operating so that still And the you TV, branding. system will saying an OS the utilize TVs TiVo

do So the similar what segment? it's to within guys IPTV you kind of

handle, you well by user their will Yes, interface TV allows that media the as be operate people that. and the powered TiVo OS based the able the clearly experience when will platform monetization we to various to ad provide as the to way, customize relates that

-- TV not place, that a platform will best-in-class Linux we're system will content a is TV access where those we've downstream, UX us, -- enable great media think personalized along what we platform is the based to going experience, to generate a only discovery units that So, as for and revenue, and built and for get have move with operating in meaningful we down monetization but and manufacturers manufacturer.

I providers is, OEMs, that for share you're think the different the that other you approach system anything guys the generates operating economics to to now, of system there? believe, in right doing So a some license the TV are willing any of operating you

key there trying also we content equipment. think for people of the some the platform, one to direct-to-consumer Yes, the offering relationship, who are trying make control when to an think agnostic. differences not differences. I we're We're certainly preserve that, entirely the obviously, I independent think media about

We are ways with many out exist not models mirror to that trying others. the in there

in manufacturers model think I number down the business you want a approach, both of to a being number their -- really there's in it's it. as to business if that particular that will, don't entirely where [ph] and they futures who it as So, to be the terms well position factors with as really inclined monetization others relationship our may and of of more or independent, cast, comes experience of technology, ways in the where truly the usurp

TiVo great. now, understand an right. as in Final I'm stands you those into the there, Just system, opportunity. does difficulty]? better XX it Vewd plus All what supports with if and it you've [technical that provide TVs, Vewd technology provide for some the OEMs soon Or can does service as Vewd right one that me Yes, how don't third-party wondering, then current you is think Help system? you embed operating million mind. might me, that clarity maybe operating streaming stands [indiscernible] here.

the XX play enabled XX on addressable units next on turning months probably the over out within that will are [indiscernible] Europe. and monetization those I think to

and has Europe. the talked core others. today we that's they to Vewd in units a middleware SmartTV about million that framework license app technology a XX So

you've we being can stack what and add components if and take TV, got you meaningfully so is various a, vertical serve have, you others, And that important. run stronger allow them a on that when they've of by TV of to is will, chipsets, OS which multiple kind software utilized you built, makers which this

in accelerates broader really complete a platform have to so, our offering media and view, our TV OS And more a from standpoint. ability a

quarter. Awesome, it. Got it. the Thanks. guys. Got Congrats on

you. Thank

you, Thank Nicholas.

closing any or like It [Operator questions call turn this more time. Kirchner no like additional to the Instructions] I looks there Mr. over back would at for to are remarks.

joining to spin for this excited Adeia for timing march future and upcoming progress going share Day call. We're Investor to and date this tuned are about And September. our call. to Both more today's everyone thanks, operator Thanks in concludes and outlook the at businesses for relating as and we our fall. the our closer today's details details. Stay Xperi specific structure virtual operator, and for forward late well-positioned

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

You disconnect. may now