Xperi (XPER) - 2024 Q4 - Annual Report

Business Operations and Strategy - The company has over 2 million activated Smart TVs powered by TiVo OS in Europe and has launched Smart TVs in the U.S. market as of February 2025[114]. - The company faces intense competition from various sources, including internal design groups at competing companies, which may impact its ability to license technology[109]. - The company's monetization strategy relies on increasing active users and content hours viewed, which is essential for generating advertising revenue[112]. - The company expects to incur significant expenses related to commercial agreements with TV manufacturers, which may not directly result in license revenue[116]. - The company divested its AutoSense and related imaging business in 2024, indicating a strategic shift in its operations[117]. - The company’s revenue from Pay-TV customers has declined due to cancellations and competition from large streaming platforms[120]. - The company’s ability to generate revenue is dependent on the willingness of advertisers to use its advertising placements and the overall demand for its technology[119]. - The company has faced challenges in maintaining relationships with key content publishers, which is critical for its monetization strategy[115]. - The company’s future growth may be adversely affected if it fails to develop and deliver innovative technologies in a competitive landscape[107]. - The company may not achieve market acceptance for new products and services, which could impact future profitability[108]. - The company has made several acquisitions and divestitures, including the recent divestiture of its AutoSense business, which may affect operational integration and stock price[129]. - The company expects significant revenue from technologies offered to consumer electronics manufacturers, but demand may decline if content in DTS audio format is insufficient[133]. - The company relies on third parties for reporting usage and volume information, and any delays or errors could harm business operations[127]. - The success of the company's solutions depends on interoperability with consumer hardware devices, which may be limited if manufacturers do not integrate the technologies[144]. - The company may face unexpected delays and revenue loss due to complex distribution agreements and reliance on third-party vendors[146]. - The company must manage its cost structure effectively to maintain profitability amid fluctuating royalties and revenue forecasts[138]. - The rapid transformation in digital content licensing and distribution has made the industry less predictable, posing risks to the company's financial condition[125]. - The company is making significant investments in new technologies, products, and services, but these may not achieve profitability or technological feasibility[147]. - The market for AI Technologies is rapidly evolving, and assumptions about cost, performance, and perceived value may be inaccurate, impacting market acceptance[150]. - The company relies on third-party providers for metadata delivery, which could affect revenue if the quality or timeliness of the metadata does not meet standards[156]. - The company is expanding internationally, where regulatory protections for non-discriminatory internet access may be limited, potentially leading to anti-competitive practices[232]. Financial Performance and Risks - The company incurred $604.6 million in goodwill impairment charges in the second half of 2022, which may lead to further evaluations of intangible assets[224]. - Total revenue for 2024 was reported as 100$27.7 million note receivable from Tobii and $15.0 million in deferred consideration related to the AutoSense Divestiture, with payments commencing in 2027[223]. - The company may face significant tax liabilities if the Distribution fails to qualify for non-recognition treatment under U.S. federal income tax laws[245]. - The IRS may assert that the Mergers cause the Distribution to be taxable, potentially leading to significant indemnification liability for the company[249]. - The company is jointly and severally liable for U.S. federal income tax liabilities of its Former Parent's consolidated tax reporting group for periods ending before the Distribution[251]. - The company may need to adjust its tax accounts if its Former Parent utilizes certain pre-Separation tax attributes, which could negatively impact financial results[253]. - The market price of the company's common stock may fluctuate significantly due to various factors, including quarterly earnings and overall market conditions[254]. - The company cannot guarantee the timing or payment of dividends in the future, as it depends on various financial and operational factors[258]. - A stockholder's percentage ownership may be diluted due to equity issuances for acquisitions or other transactions[259]. - The company has repurchased approximately 2.2 million shares of common stock at a total cost of$20.0 million, averaging $9.23 per share[257]. - The stock repurchase program allows for up to$100.0 million in common stock repurchases, with no expiration date or obligation to repurchase a specific amount[257]. Compliance and Regulatory Risks - The company faces risks related to international operations, including compliance with complex laws and potential tariffs affecting product prices and demand[166]. - The company is subject to evolving regulations regarding data privacy, cybersecurity, and artificial intelligence, which may impose significant operational costs[227]. - The company collects and processes Personal Information, and any failure to comply with evolving data privacy laws could result in significant liabilities and negative publicity[184]. - New laws, such as the EU General Data Protection Regulation (GDPR), impose fines of up to €20 million or 4% of annual global revenue for non-compliance, which could adversely affect the company's financial condition[190]. - The company is monitoring the impact of new data privacy laws and regulations, which may restrict targeted advertising and data collection practices[193]. - Increased scrutiny from regulators on cloud service providers may lead to operational disruptions and increased costs for transferring Personal Information outside the EU[196]. - The company may need to adapt its business practices to comply with evolving data protection laws, which could hinder growth and increase operational costs[200]. - The company faces significant risks related to intellectual property litigation, which could result in substantial legal costs and harm its business operations[201]. - The company may need to seek licenses from third parties due to intellectual property infringement claims, which could hinder its ability to sell or use relevant technology[202]. - The company relies on a combination of legal agreements and laws to protect its technology and intellectual property, but failures in protection could weaken its competitive position[203]. - Compliance with environmental and social responsibility regulations may result in increased costs and scrutiny, impacting the company's financial condition[221]. - The company engages in various promotional activities that are regulated by state and federal laws, which could result in penalties if violated[243]. - The company may incur significant compliance costs due to new regulations affecting its products and services, particularly in the broadcasting and telecommunications sectors[238]. Cybersecurity Risks - The company is exposed to cybersecurity risks that could harm its reputation and financial condition if significant disruptions occur[172]. - The company faces numerous cybersecurity risks, including security breaches and unauthorized access, which threaten the confidentiality and integrity of its IT systems[174]. - Cyberattacks are expected to increase in frequency and sophistication, potentially impacting the company's ability to detect and recover from incidents[176]. - The company and its third-party providers regularly experience cyberattacks, although no material impact on operations or financial results has been reported to date[177]. - Compliance with the Payment Card Industry Data Security Standard (PCI-DSS) is critical, as non-compliance could lead to fines and restrictions on card acceptance[179]. - The European Union and the United Kingdom impose stringent cybersecurity obligations, which may increase compliance costs and complexity for multinational organizations[182]. - The company maintains processes for identifying and managing cybersecurity risks as part of its enterprise risk management program[280]. Operational Risks - The complexity of the company's products may lead to undetected defects or errors, resulting in lost revenue and market acceptance issues[155]. - The company is vulnerable to natural disasters and geopolitical conflicts, which could disrupt operations and require substantial recovery efforts[217]. - The company's operations are particularly at risk due to its location in California and reliance on suppliers in Asia, both of which are prone to natural disasters[218]. - Intense competition for qualified employees may hinder the company's ability to attract and retain essential personnel, impacting business growth[123]. - The company is involved in legal proceedings related to license agreements and intellectual property rights, but management does not anticipate a material adverse effect on its results of operations[286]. - The company may incur additional costs if the forum selection clause in its amended certificate of incorporation is found inapplicable or unenforceable[265]. - The company has significant resources and management oversight dedicated to maintaining effective internal control over financial reporting[273]. - The company leases its principal corporate headquarters in San Jose, California, with approximately 127,000 square feet of space[285]. - The company has approximately 1,680 employees and over 35 years of operating experience in the technology sector[300].