Core Insights - Xperi reported Q2 2025 results with non-GAAP revenue of $105.9 million, missing estimates by $10 million, and non-GAAP EPS of $0.11, two cents below consensus [1][2] - The company lowered its full-year guidance for revenue and margins due to a challenging macroeconomic environment [1][13] Financial Performance - Non-GAAP revenue decreased by 11.5% year-over-year from $119.6 million in Q2 2024 [2] - Non-GAAP EPS fell by 8.3% from $0.12 in Q2 2024 [2] - Non-GAAP operating income increased to $8.8 million, up 6.0% from $8.3 million in Q2 2024 [2] - Non-GAAP net income declined by 14.3% year-over-year to $4.8 million [2] - Adjusted EBITDA rose to $15.2 million, a 4.1% increase from $14.6 million in the previous year, with an adjusted EBITDA margin improvement to 14.4% from 12.2% [2][8] Business Overview - Xperi operates at the intersection of entertainment and technology, focusing on software platforms for Smart TVs and connected cars, with brands like TiVo and DTS [3][4] - The company aims to expand its independent media platform and DTS AutoStage infotainment system, emphasizing user growth and monetization through advertising and subscriptions [4][5] User and Device Growth - TiVo One's monthly active users increased from 2.5 million to 3.7 million, on track to exceed the goal of 5 million by the end of FY2025 [5] - DTS AutoStage expanded to 12 million vehicles, up from 11 million, with new partnerships with major automotive brands [6] Strategic Focus - Xperi's strategy includes developing technology platforms for partners, allowing them to monetize content and advertising effectively [9] - The TiVo One Advertising Platform is crucial for attracting advertising revenue, although specific financial metrics were not disclosed this quarter [10] Outlook and Guidance - Management revised FY2025 revenue guidance to $440–460 million from $480–500 million, citing increased uncertainty in the macroeconomic environment [13] - Non-GAAP adjusted EBITDA margin guidance was also lowered to a range of 15% to 17% [13]

[Xperi Inc. Q2 2025 Preliminary Results and Outlook Update](index=1&type=section&id=Xperi%20Inc.%20Q2%202025%20Preliminary%20Results%20and%20Outlook%20Update) [Preliminary Second Quarter 2025 Financial Results](index=1&type=section&id=Preliminary%20Second%20Quarter%202025%20Financial%20Results) The company reported preliminary Q2 2025 revenue of $105.9 million, with an improved operating loss and positive cash flow Q2 2025 vs Q2 2024 Financial Highlights | Metric ($ millions, except per share) | Q2 FY25 | Q2 FY24 | | :--- | :--- | :--- | | **GAAP Results** | | | | Revenue | $105.9 | $119.6 | | GAAP Operating Loss | $(11.1) | $(21.9) | | GAAP Net Loss | $(14.8) | $(30.3) | | GAAP Diluted Loss Per Share | $(0.32) | $(0.67) | | **Non-GAAP Results** | | | | Non-GAAP Operating Income | $8.8 | $8.3 | | Non-GAAP Net Income | $4.8 | $5.6 | | Non-GAAP Earnings Per Share | $0.11 | $0.12 | | Non-GAAP Adjusted EBITDA | $15.2 | $14.6 | | Non-GAAP Adjusted EBITDA Margin | 14.4% | 12.2% | - The company generated **$10 million in positive operating cash flow** and **$5 million in free cash flow** during the second quarter[1](index=1&type=chunk) - Financial results were impacted by a changing macroeconomic environment creating increased customer uncertainty[2](index=2&type=chunk) [Fiscal Year 2025 Financial Outlook Update](index=2&type=section&id=Fiscal%20Year%202025%20Financial%20Outlook%20Update) The company lowered its full-year 2025 financial outlook due to macroeconomic uncertainty impacting customers Updated Fiscal Year 2025 Outlook | Category | Prior Outlook | Updated Outlook | | :--- | :--- | :--- | | Revenue | $480M to $500M | $440M to $460M | | Non-GAAP Adjusted EBITDA Margin | 16% to 18% | 15% to 17% | - The full-year financial outlook was updated due to the market backdrop and increased uncertainty for its customers[2](index=2&type=chunk) [Operational Highlights and Strategic Progress](index=1&type=section&id=Operational%20Highlights%20and%20Strategic%20Progress) The company reports continued progress on long-term growth initiatives, achieving key user and device milestones - The company continues to demonstrate progress on its longer-term growth goals and strategic initiatives, with key milestones including[3](index=3&type=chunk): - Surpassing **3.7 million TiVo One Monthly Active Users** - Reaching **three million global IPTV subscriber households** - Exceeding **12 million vehicles on the DTS AutoStage platform** [Non-GAAP Financial Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP financial measures and provides reconciliations to their comparable GAAP figures [Definition of Non-GAAP Measures](index=4&type=section&id=Definition%20of%20Non-GAAP%20Measures) Key non-GAAP metrics are defined by excluding specific items like stock-based compensation from GAAP measures - Non-GAAP measures provide perspective into ongoing business performance by excluding certain items[14](index=14&type=chunk)[15](index=15&type=chunk)[17](index=17&type=chunk): - **Non-GAAP Operating Income** excludes stock-based compensation, amortization, and transaction/restructuring costs - **Non-GAAP Net Income** excludes the same items as above and their related tax effects - **Non-GAAP Adjusted EBITDA** excludes interest, taxes, stock-based compensation, and depreciation/amortization from GAAP Net Income [GAAP to Non-GAAP Reconciliations](index=7&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) Detailed tables reconcile Q2 2025 GAAP Net Loss and Operating Loss to their non-GAAP counterparts Q2 2025 Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA (in thousands) | Description | Amount | | :--- | :--- | | **GAAP net loss** | **$ (14,781)** | | Interest expense | $ 915 | | Provision for income taxes | $ 4,636 | | Stock-based compensation | $ 10,327 | | Depreciation expense | $ 3,448 | | Amortization of intangible assets | $ 9,144 | | Amortization of capitalized cloud computing costs | $ 1,081 | | Transaction, integration and restructuring costs | $ 73 | | Severance and retention | $ 365 | | **Non-GAAP Adjusted EBITDA** | **$ 15,208** | Q2 2025 Reconciliation of GAAP Operating Loss to Non-GAAP Operating Income (in thousands) | Description | Amount | | :--- | :--- | | **GAAP operating loss** | **$ (11,133)** | | Stock-based compensation | $ 10,327 | | Amortization of intangible assets | $ 9,144 | | Transaction, integration and restructuring costs | $ 73 | | Severance and retention | $ 365 | | **Non-GAAP operating income** | **$ 8,776** | [Important Disclosures](index=2&type=section&id=Important%20Disclosures) This section contains a Safe Harbor Statement for forward-looking statements and a financial disclosure advisory - The financial data presented is **preliminary** and may differ from actual results upon completion of quarter-end review[9](index=9&type=chunk) - The press release contains **forward-looking statements** regarding future results and growth, which involve risks and uncertainties[8](index=8&type=chunk)

Business Transformation & Strategy - Xperi's core IP licensing business faced industry-driven challenges, leading to a transformation to focus on product-oriented businesses[8, 9] - The separation of Xperi and Adeia in 2022 created two standalone public companies, allowing for more focused strategies and better positioning for success[9] - Xperi is focused on leveraging its core expertise in attractive, growing markets: IPTV, in-cabin entertainment, and connected TV advertising[11] - The company expects key markets to deliver approximately $200 million in incremental revenue in 2026[101] Financial Performance & Outlook - Xperi's 2023 revenue was $521 million[13], with an adjusted EBITDA of $35 million[13], resulting in an adjusted EBITDA margin of 6.7%[33] - The company expects revenue between $500 million and $530 million in 2024[31], and an adjusted EBITDA margin between 12% and 14%[33] - Year-to-date total shareholder return is 13%[27], outperforming peers[27] Board & Governance - Rubric Capital is seeking to replace half of Xperi's independent directors, but has not offered meaningful ideas for improving the business[11] - The Board had identified two new exceptional candidates it intended to nominate this year just as Rubric began its activism campaign[11] - Rubric's nominees would not bring any relevant experience that incumbent directors do not already possess[36]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lose momentum if future growth does not justify high valuations [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Xperi (XPER) Stock Analysis - Xperi (XPER) has shown a four-week price change of 12.4%, indicating growing investor interest and recent price momentum [4] - Over the past 12 weeks, XPER gained 3.3%, with a beta of 1.3, suggesting it moves 30% more than the market in either direction [5] - XPER has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - XPER has received upward revisions in earnings estimates, earning a Zacks Rank 1 (Strong Buy), which typically attracts more investor interest [7] - The stock is trading at a Price-to-Sales ratio of 0.73, suggesting it is undervalued at 73 cents for each dollar of sales, providing room for growth [7] Group 4: Additional Investment Opportunities - Besides XPER, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]

Group 1 - Xperi (XPER) has shown a 7.3% increase in stock price over the past four weeks, with a mean price target of $18.25 indicating a potential upside of 134.3% [1] - The mean estimate includes four short-term price targets with a standard deviation of $8.02, suggesting variability in analyst predictions; the lowest estimate of $12 indicates a 54% increase, while the highest estimate suggests a 285.1% increase to $30 [2] - Analysts show strong agreement on XPER's ability to report better earnings than previously predicted, which supports the view of potential upside [4] Group 2 - The Zacks Consensus Estimate for XPER has increased by 46.2% over the past month, with no negative revisions, indicating positive earnings momentum [12] - XPER holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates, which is a strong indicator of potential upside [13] - While consensus price targets may not be reliable for predicting exact stock gains, they can provide a directional guide for price movement [13]

Group 1 - Xperi (XPER) has shown a significant price increase of 27.7% over the past four weeks, with a mean price target of $18.25 indicating an upside potential of 118.8% [1] - The average price target ranges from a low of $12 to a high of $30, with a standard deviation of $8.02, suggesting variability in analysts' estimates [2] - The consensus price target is not the sole metric for investment decisions, as analysts' ability to set accurate price targets has been questioned [3] Group 2 - Strong agreement among analysts regarding XPER's earnings prospects, indicated by positive earnings estimate revisions, supports the expectation of stock upside [4][11] - Over the last 30 days, the Zacks Consensus Estimate for XPER's current year earnings has increased by 46.2%, with no negative revisions [12] - XPER holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates, indicating strong potential for near-term upside [13]

Revenue Performance - Revenue for the three months ended March 31, 2025, was $114.0 million, a decrease of $4.8 million or 4% compared to $118.8 million in the same period of 2024[145] - Pay-TV revenue decreased by $6.9 million, primarily due to declines in core guide products and consumer hardware, while Connected Car revenue increased by $9.0 million[146] Operating Expenses - Total operating expenses for the three months ended March 31, 2025, were $130.5 million, a decrease of $20.7 million or 14% compared to $151.2 million in the same period of 2024[147] - Research and development expenses decreased by $10.9 million or 22%, totaling $39.5 million for the three months ended March 31, 2025, primarily due to lower spending following the AutoSense Divestiture[151] - Selling, general and administrative expenses were $48.7 million, a decrease of $7.7 million or 14% compared to $56.4 million in the same period of 2024[153] Net Loss and Tax Rate - The company recorded a net loss of 16% for the three months ended March 31, 2025, compared to a net loss of 11% in the same period of 2024[143] - The effective tax rate for the three months ended March 31, 2025, was (23.5)%, with an income tax expense of $3.5 million on a pretax loss of $14.9 million[162] Business Divestitures - The AutoSense Divestiture was completed in January 2024, streamlining the business and enhancing focus on entertainment markets[141] - The company completed the sale of Perceive Corporation for $80.0 million in cash in October 2024, allowing for a greater focus on entertainment-based solutions[142] Cash and Liquidity - As of March 31, 2025, cash and cash equivalents decreased to $87.988 million from $130.564 million at December 31, 2024, a decline of approximately 33%[165] - The current ratio improved to 2.3 as of March 31, 2025, compared to 1.6 at December 31, 2024, indicating better short-term liquidity[165] - Net cash used in operating activities for the three months ended March 31, 2025, was $22.258 million, a significant improvement from $49.787 million for the same period in 2024[168] Capital Expenditures and Share Repurchase - Capital expenditures for 2025 are expected to be approximately $20 million, primarily for computer hardware and software[172] - The company repurchased approximately 2.2 million shares at an average price of $9.23 per share, totaling around $20 million, leaving $80 million available for future repurchases[167] Financing Activities - Net cash used in financing activities was $16.111 million for the three months ended March 31, 2025, primarily due to a $50 million voluntary repayment of a promissory note[173] - The company borrowed $40 million under the accounts receivable securitization program (AR Facility) on February 21, 2025, with interest payments expected to be approximately $2.6 million for the next 12 months[177] - The company anticipates that current cash and cash equivalents, along with borrowings under the AR Facility, will be sufficient to meet its needs for at least the next 12 months[178] Interest Expense - A 1% increase in the secured overnight financing rate (SOFR) would result in an estimated annual increase in interest expense of approximately $0.5 million[185] - The company made a full principal payment of $50 million on the Vewd senior unsecured promissory note on February 21, 2025, using cash on hand and new financing[175]

Core Viewpoint - Xperi reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.13 per share, and showing a significant improvement from a loss of $0.05 per share a year ago, indicating a positive earnings surprise of 23.08% [1] Financial Performance - The company achieved revenues of $114.03 million for the quarter ended March 2025, which was slightly below the Zacks Consensus Estimate by 0.21%, and a decrease from $118.84 million in the same quarter last year [2] - Over the last four quarters, Xperi has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - Xperi shares have declined approximately 31.7% since the beginning of the year, contrasting with the S&P 500's decline of 4.7% [3] - The current Zacks Rank for Xperi is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.19 on revenues of $115.82 million, and for the current fiscal year, it is $0.93 on revenues of $482.52 million [7] - The trend of estimate revisions for Xperi is mixed, which may change following the recent earnings report [6] Industry Context - The Technology Services industry, to which Xperi belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - GigaCloud Technology Inc., another company in the same industry, is expected to report quarterly earnings of $0.46 per share, reflecting a year-over-year decline of 45.2% [9]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $114 million, a decrease of 4% from $119 million in the previous year, and a 2% decrease when adjusting for divestitures [20] - Adjusted EBITDA was $16 million, representing a margin of 14%, which is over 200% increase compared to $5 million in the prior year [8][22] - Non-GAAP earnings per share improved to $0.16 from a loss of $0.05 per share in the previous year [22] Business Line Data and Key Metrics Changes - Pay TV revenue was $50 million, down 12%, with strong growth in IPTV (up 25%) offset by declines in core pay TV business [20] - Consumer Electronics revenue decreased by 5% to $23 million, primarily due to lower production volumes [20] - Connected Car revenue rose 37% to $33 million, driven by licensing agreements for HD Radio [20] - Media Platform revenue was $8 million, down 30% due to lower middleware revenue and timing shifts in advertising commitments [21] Market Data and Key Metrics Changes - IPTV subscriber households increased to over 2.75 million, a 36% year-over-year growth [16] - The Connected Car segment finished the quarter with a footprint of 11 million vehicles across over 130 countries [16] Company Strategy and Development Direction - The company is focused on three growth solutions: Connected TV advertising, in-cabin entertainment, and TiVo video over broadband [8] - The TiVo One ad platform aims to maximize engagement and monetization on streaming devices [10] - The company is expanding its partnerships with TV manufacturers and expects to add 1-2 new partners this year [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year growth goals despite macroeconomic uncertainties [6] - The company maintains its financial outlook for the year, indicating modest impacts from tariffs [25][42] - Management expects to see positive cash flow in the second half of the year [32] Other Important Information - The company completed a financing arrangement with PNC Bank for a $55 million line of credit [23] - Operating cash usage was $22 million, primarily due to the paydown of accrued liabilities [24] Q&A Session Summary Question: Regarding IPTV and user base growth - Management indicated that improvements in subscribership revenue will be seen throughout the year, with ongoing efforts to assist deployments [26] Question: Capacity to handle increased IPTV customers - Management confirmed that they are staging deployments and have the capacity to manage the increase over time [30] Question: Positive cash flow expectations - Management stated that while Q1 is typically the weakest quarter, they expect positive cash flow for the remainder of the year, particularly in the second half [32] Question: Additional OEMs in the pipeline for TV companies - Management expects to add at least one to two new TV partners this year beyond the existing eight [36] Question: Active user targets and tariff impacts - Management remains on track to reach 5 million monthly active users by year-end and anticipates reaching 7 million by the end of next year, with tariffs having a modest impact [38]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $114 million, a decrease of 4% from $119 million in Q1 2024, and a 2% decrease when adjusting for divestitures [17] - Adjusted EBITDA was $16 million, representing 14% of revenue, up over 200% compared to $5 million in the prior year quarter [6][19] - Non-GAAP earnings per share was $0.16, an increase from a loss of $0.05 per share in the previous year [19] Business Line Data and Key Metrics Changes - Pay TV revenue was $50 million, down 12%, with strong growth in IPTV (up 25%) offset by declines in core pay TV [17] - Consumer Electronics revenue decreased by 5% to $23 million, primarily due to lower production volumes [17] - Connected Car revenue rose 37% to $33 million, driven by minimum guarantee licensing arrangements for HD Radio [17] - Media Platform revenue was $8 million, down 30% due to lower middleware revenue and timing shifts in advertising commitments [17] Market Data and Key Metrics Changes - IPTV subscriber households increased to over 2.75 million, a 36% year-over-year increase [13] - DTS AutoStage finished the quarter with a footprint of 11 million vehicles in over 130 countries [13] Company Strategy and Development Direction - The company is focused on three growth solutions: Connected TV advertising, in-cabin entertainment, and TiVo video over broadband [6][7] - The rollout of the TiVo One ad platform aims to maximize engagement and monetization across smart TVs and video over broadband devices [8][10] - The company is expanding its partnerships with TV manufacturers and expects to add at least one to two new TV partners this year [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year growth goals despite macroeconomic uncertainties [5] - The company is maintaining its financial outlook for the year, with modest impacts from tariffs observed so far [21][41] - Management anticipates positive cash flow in the second half of the year, with Q1 typically being the weakest quarter [30] Other Important Information - The company completed a financing arrangement with PNC Bank for a $55 million line of credit, which will support operational needs [20] - The company launched over 80 additional entertainment content partner applications on the TiVo OS platform [11] Q&A Session Summary Question: Regarding IPTV and user base growth - Management indicated that improvements in subscribership revenue will play out throughout the year, with ongoing efforts to assist deployments [24] Question: Capacity to handle increased IPTV customers - Management confirmed that they are staging and working with customers to ensure they can handle the increase in IPTV customers over time [28] Question: Positive cash flow expectations - Management stated that while Q1 is seasonally weak, they expect the balance of the year to be positive, particularly in the second half [30] Question: Additional OEMs in the pipeline for TV companies - Management expects to add at least one to two TV partners this year beyond the existing eight [34] Question: Target for active users by year-end - Management is on track to exit the year with 5 million monthly active users and expects to reach at least 7 million by the end of next year [35][36] Question: Macro factors influencing guidance - Management is maintaining guidance despite uncertainties, indicating strong execution in Q1 [41][42] Question: Opportunities for ARPU growth with TiVo One - Management highlighted the value of the homepage ad unit and its potential to enhance monetization across platforms [43][44] Question: Updates on U.S. TiVo OS devices - Management noted that the U.S. footprint will grow as more TVs and set-top boxes are rolled out, increasing advertiser interest [46]