XPER - Xperi Inc. Announces Fourth Quarter and Full Year 2022 Results

February, 21 2023 04:06 PM Xperi Corporation

Strong financial performance in first quarter as an independent company

Awarded first design win for TiVo’s video platform in Connected Car

Xperi Inc. (NYSE: XPER) (the “Company” or “Xperi”), an entertainment technology company that invents, develops, and delivers technologies that enable extraordinary experiences, today announced fourth quarter and full year 2022 financial results for the period ended December 31, 2022.

“Our first quarter as an independent company was underscored by substantial market progress, notable design wins, and strong financial performance,” said Jon Kirchner, chief executive officer of Xperi. “Consumers are demanding higher quality digital experiences and our customers and partners are increasingly selecting our independent media platforms to meet that demand. We are intensely focused on expanding our platform adoption and our recent design wins in Smart TV and Connected Car are a testament to the ongoing success of our growth strategy.”

Financial Highlights

Revenue of $136M during the fourth quarter was up 9% from the year-ago period, while full year 2022 revenue of $502M was up 3% from the prior year.
Fourth quarter GAAP Net Loss was ($297M), or ($7.06) per share, and non-GAAP Net Income ¹ was $4M, or $0.08 per share.
Adjusted EBITDA ¹ was $4M for the fourth quarter, resulting in an Adjusted EBITDA margin of 3%.
The Company booked a non-cash charge of $258M in the fourth quarter for goodwill impairment and real estate restructuring in connection with its year-end review.
Full year results include the Xperi product business on a carve-out basis for the first 9 months, during which time it was part of Xperi Holding Corporation, now known as Adeia Inc. (Nasdaq: ADEA).

¹ See discussion of “Non-GAAP Financial Measures” and GAAP to non-GAAP Reconciliation below.

Recent Key Operating Achievements

Media Platform

TiVo’s partner Vestel, the first Smart TV OEM to incorporate the TiVo Operating System (TiVo OS), announced the brand lineup for their Smart TVs Powered by TiVo will be Vestel, Hitachi, JVC, Daewoo, Regal, and Telefunken. These TVs will feature chipsets from market-leader MediaTek.
TiVo OS will be integrated onto Amlogic’s 4K and 2K chipsets designed for Smart TVs, significantly reducing cost and time-to-market for TV OEMs looking to roll-out TiVo’s independent media platform.

Connected Car

Xperi was awarded its first design win for TiVo’s video platform in Connected Car with a major European automobile manufacturer, with vehicles expected to ship in late 2023.
DTS AutoStage is now in production with five car brands and being deployed in more than 100 models across 140 countries, demonstrating the global value of our solution.
The Company was awarded a new design win for DTS AutoSense, Xperi’s Driver Monitoring System (DMS) and Occupant Monitoring System (OMS), with a major Asian automotive OEM, which will significantly expand Xperi’s DMS and OMS footprint beginning in 2024.
Xperi ended 2022 with committed business in Connected Car, consisting of HD Radio, DTS AutoStage, and DTS AutoSense, totaling more than $300M.

Pay TV

TiVo IPTV continued its double-digit subscriber growth in the quarter and finished FY22 with subscribers up 80% and revenue more than doubling compared to FY21.
TiVo’s IPTV platform won the Fierce Innovation Award for Customer Engagement.

Consumer Electronics

DTS:X, Xperi’s immersive audio technology, will be integrated in LG’s new line of OLED and premium LCD TVs, expected to be in the market in the first half of 2023.
The Company announced that Sony Pictures Entertainment, IMAX Corp., and DTS have extended their agreement to distribute multiple new titles in the IMAX Enhanced format, featuring DTS’ premium audio technology.
Xperi announced DTS:X is expected to launch on Disney+ in 2023.

Financial Outlook

The Company is providing the following guidance for fiscal year 2023.

Category ($ in millions)

GAAP Outlook

Non-GAAP Outlook

Revenue

510 to 540

Adjusted EBITDA Margin ^1,2

n/a

6% to 10%

¹ See discussion of “Non-GAAP Financial Measures” below.

² With respect to Adjusted EBITDA Margin, the Company has determined that it is unable to provide a quantitative reconciliation of this forward-looking non-GAAP measure to the most directly comparable forward-looking GAAP measure with a reasonable degree of confidence in its accuracy without unreasonable effort, as items including restructuring and impacts from discrete tax adjustments and tax law changes are inherently uncertain and depend on various factors, many of which are beyond the Company's control.

Conference Call Information

The Company will hold its fourth quarter and full year 2022 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Tuesday, February 21, 2023. To access the call toll-free, please dial 1-888-660-6513, otherwise dial +1 929-203-0876. The conference ID is 5483252. All participants should dial in 15 minutes prior to the start of the conference call and can use the conference ID to access the call. The Company also suggests using the webcast link to access the call at Q4 Earnings Call Webcast .

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on information available to the Company as of the date hereof, as well as the Company’s current expectations, assumptions, estimates and projections that involve risks and uncertainties. In some cases, you can identify forward-looking statements by the words “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “expect,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under the captions “Risk Factors,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

About Xperi Inc.

Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands and partnerships (DTS®, HD Radio™, TiVo®), and by its startup, Perceive, and IMAX Enhanced, an IMAX and DTS partnership, are integrated into billions of consumer devices and media platforms worldwide, powering smart devices, connected cars and entertainment experiences. Xperi has created a unified ecosystem that reaches highly engaged consumers driving increased value for partners, customers and consumers.

Xperi, DTS, HD Radio, Perceive, TiVo, and their respective logos are trademarks or registered trademarks of affiliated companies and partners of Xperi Inc. in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company’s earnings release contains non-GAAP financial measures adjusted for either one-time or ongoing non-cash acquired intangibles amortization charges; amortization of capitalized cloud computing costs; costs related to actual or planned acquisitions, financing, and divestitures including transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; all forms of stock-based compensation; impairment of assets and goodwill; other items not indicative of our ongoing operating performance, and related tax effects for each adjustment. Management believes that the non-GAAP measures used in this release provide investors with important perspectives into the Company’s ongoing business and financial performance and provide a better understanding of our core operating results reflecting our normal business operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as Adjusted EBITDA, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached hereto. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. All financial data is presented on a GAAP basis except where the Company indicates its presentation is on a non-GAAP basis.

Set forth below are reconciliations of the Company’s reported GAAP to non-GAAP financial metrics.

SOURCE: XPERI INC.

XPER-E

XPERI INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)







Three Months Ended

Twelve Months Ended


December 31, 2022

December 31, 2021

December 31, 2022

December 31, 2021









Revenue

$
135,531


$
124,745


$
502,260


$
486,483

Operating expenses:








Cost of revenue, excluding depreciation and amortization of intangible assets


37,258



37,643



122,946



125,626

Research and development


57,713



50,498



216,355



194,869

Selling, general and administrative


60,506



51,834



217,402



199,921

Depreciation expense


4,804



5,526



20,501



22,584

Amortization expense


16,044



22,045



62,209



105,311

Impairment of long-lived assets


7,724



-



7,724



-

Goodwill Impairment


250,555



-



604,555



-

Total operating expenses


434,604



167,546



1,251,692



648,311

Operating loss


(299,073
)


(42,801
)


(749,432
)


(161,828
)
Other income, net


2,117



1,078



1,815



1,590

Loss before taxes


(296,956
)


(41,723
)


(747,617
)


(160,238
)
Provision for income taxes


1,090



10,679



13,589



18,840

Net Loss


(298,046
)


(52,402
)


(761,206
)


(179,078
)
Less: net loss attributable to noncontrolling interest


(1,016
)


(630
)


(3,722
)


(3,456
)
Net loss attributable to the Company

$
(297,030
)

$
(51,772
)

$
(757,484
)

$
(175,622
)
Loss per share attributable to the Company:








Basic and Diluted loss per share

$
(7.06
)

$
(1.23
)

$
(18.02
)

$
(4.18
)









Number of Basic and Diluted shares outstanding


42,043



42,024



42,029



42,024

XPERI INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)









December 31,


December 31,



2022


2021

ASSETS






Current assets:






Cash and cash equivalents

$
160,127


$
120,695

Accounts receivable, net


64,712



79,494

Unbilled contracts receivable, net


65,251



50,962

Other current assets


42,174



25,985

Total current assets


332,264



277,136

Long-term unbilled contracts receivable


4,289



3,825

Property and equipment, net


47,827



57,477

Operating lease right-of-use assets


52,901



61,758

Intangible assets, net


264,376



270,934

Long-term deferred tax assets


2,096



1,847

Goodwill


-



536,512

Other long-term assets


33,158



19,223

Total assets

$
736,911


$
1,228,712

LIABILITIES AND EQUITY






Current liabilities:






Accounts payable

$
14,864


$
7,362

Accrued liabilities


110,014



84,404

Deferred revenue


25,363



28,211

Total current liabilities


150,241



119,977

Deferred revenue, less current portion


19,129



23,663

Long-term deferred tax liabilities


20,559



14,428

Long-term debt


50,000



-

Noncurrent operating lease liabilities


42,666



49,017

Other long-term liabilities


5,330



5,670

Total liabilities


287,925



212,755

Commitments and contingencies






Company stockholders’ equity:






Net investment by Former Parent


-



1,025,838

Preferred stock


-



-

Common stock


42



-

Additional paid-in capital


1,136,330



-

Accumulated other comprehensive loss


(4,119
)


(676
)
Accumulated deficit


(668,835
)


-

Total Company stockholders’ equity


463,418



1,025,162

Noncontrolling interest


(14,432
)


(9,205
)
Total equity


448,986



1,015,957

Total liabilities and equity

$
736,911


$
1,228,712

XPERI INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)






Twelve Months Ended



December 31, 2022


December 31, 2021

Cash flows from operating activities:






Net loss

$
(761,206
)

$
(179,078
)
Adjustments to reconcile net loss to net cash from operating activities:






Depreciation of property and equipment


20,501



22,584

Amortization of intangible assets


62,209



105,311

Stock-based compensation expense


45,303



33,509

Goodwill impairment


604,555



-

Impairment of long-lived assets


7,724



-

Deferred income taxes


(1,602
)


6,913

Other


24



(1,754
)
Changes in operating assets and liabilities:






Accounts receivable


17,505



(2,416
)
Unbilled contracts receivable


(12,473
)


15,475

Other assets


(20,439
)


15,296

Accounts payable


6,633



(4,018
)
Accrued and other liabilities


11,123



(37,249
)
Deferred revenue


(8,302
)


1,974

Net cash from operating activities


(28,445
)


(23,453
)
Cash flows from investing activities:






Purchases of property and equipment


(14,207
)


(8,893
)
Purchases of intangible assets


(166
)


(186
)
Net cash paid for acquisitions


(50,473
)


(12,401
)
Net cash from investing activities


(64,846
)


(21,480
)
Cash flows from financing activities:






Net proceeds from capital contributions by Former Parent


83,235



-

Net transfers from Former Parent


52,802



83,330

Withholding taxes related to net share settlement of restrict awards


(286
)


-

Net cash from financing activities


135,751



83,330

Effect of exchange rate changes on cash and cash equivalents


(3,028
)


(3,326
)
Net increase in cash and cash equivalents


39,432



35,071

Cash and cash equivalents at beginning of period


120,695



85,624

Cash and cash equivalents at end of period

$
160,127


$
120,695

Supplemental disclosure of cash flow information:






Debt incurred in connection with acquisition

$
50,000


$
-

Interest paid

$
756


$
-

Income taxes paid, net of refunds

$
13,416


$
11,801

XPERI INC. GAAP TO NON-GAAP RECONCILIATIONS (in thousands, except per share amounts) (unaudited)





Net income attributable to the Company:






Three Months Ended




December 31, 2022







GAAP net loss attributable to the Company

$
(297,030
)






Adjustments to GAAP net loss attributable to the Company:




Stock-based compensation expense:




Cost of revenue


729


Research, development and other


5,266


Selling, general and administrative


9,547


Amortization of intangible assets


16,044


Impairment of long-lived assets


7,724


Goodwill impairment


250,555


Acquisition and separation-related costs:




Transaction and other related costs recorded in selling, general and administrative


2,234


Severance and retention recorded in research, development and other


2,009


Severance and retention recorded in selling, general and administrative


291


Separation-related bonus adjustment recorded in cost of revenue, excluding depreciation and amortization of intangible assets


(24
)

Separation-related bonus adjustment recorded in research and development


(67
)

Separation-related bonus adjustment recorded in selling, general and administrative


91


Non-GAAP tax adjustment (1)


6,340


Non-GAAP net income attributable to the Company

$
3,709












Diluted earnings per share attributable to the Company:






Three Months Ended




December 31, 2022







GAAP loss per share attributable to the Company

$
(7.06
)






Adjustments to GAAP loss per share attributable to the Company:




Stock-based compensation expense


0.37


Amortization expense


0.38


Impairment of long-lived assets


0.18


Goodwill impairment


5.96


Acquisition and separation-related costs


0.11


Non-GAAP tax adjustment


0.15


Difference in shares used in the calculation


(0.01
)

Non-GAAP diluted earnings per share attributable to the Company

$
0.08







GAAP weighted average number of shares-basic/diluted


42,043


Non-GAAP weighted average number of shares-diluted


46,470

(1)

The provision for income taxes is adjusted to reflect the net direct and indirect income tax effects of the various non-GAAP pretax adjustments.

XPERI INC. GAAP TO NON-GAAP RECONCILIATIONS (in thousands) (unaudited)






Three Months Ended



December 31, 2022





GAAP loss before taxes

$
(296,956
)




Interest expense


839

Depreciation expense


4,804

Amortization of intangible assets


16,044

Amortization of capitalized cloud computing costs


527

Impairment of long-lived assets


7,724

Goodwill impairment


250,555

Acquisition and integration-related costs:



Transaction and other related costs recorded in selling, general and administrative


2,234

Severance and retention recorded in research and development


2,009

Severance and retention recorded in selling, general and administrative


291

Separation-related bonus adjustment recorded in cost of revenue, excluding depreciation and amortization of intangible assets


(24
)
Separation-related bonus adjustment recorded in research and development


(67
)
Separation-related bonus adjustment recorded in selling, general and administrative


91

Stock-based compensation expense:



Cost of revenue


729

Research and development


5,266

Selling, general and administrative


9,547

Non-GAAP Adjusted EBITDA

$
3,613

View source version on businesswire.com: https://www.businesswire.com/news/home/20230221005738/en/

Xperi Investor Contact:
Mike Iburg
VP, Investor Relations
+1 408-321-3827
ir@xperi.com

Media Contact:
Amy Brennan
Senior Director, Corporate Communications
+1 949-518-6846
amy.brennan@xperi.com

Company Name:	Xperi Corporation
Stock Symbol:	XPER
Market:	NASDAQ
Website:	xperi.com

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