Xperi Inc. Q2 FY2025 earnings call

• Strategic initiatives progress: TiVo One ad platform made substantial progress with 3.7 million MAUs, on track for 5 million goal, 9 partners signed with 1 more needed for 10 partners target. • Connected car: DTS AutoStage signed 2 new OEM programs, launched in new car models like BMW 5 Series, broadened broadcaster ecosystem with content from over 60 countries. • IPTV: Solutions in North America and Latin America saw over 30% year-over-year growth, reaching over 3 million subscriber households, with renewals from key customers like Liberty Latin America and Cable One. • Consumer electronics: Revenue increased 23% excluding Perceive divestiture, with minimum guarantee renewals for codec and audio solutions, and new Clear Dialogue technology signed with a major TV OEM. • Cost management: Adjusted operating expense decreased $19 million due to business transformation efforts, working to lower cost profile for long-term margin expansion.

For the second quarter of 2025, Xperi reported revenue of $106 million. Adjusted EBITDA increased 4% to $15 million, which is 14% of revenue. Non-GAAP earnings per share was $0.11. Operating cash flow for the quarter was $10 million, and positive free cash flow was $5 million. Growth solutions include: TiVo One ad platform with 3.7 million monthly active users as of Q2 end, on track to reach 5 million by year-end; connected car with DTS AutoStage expanding through new OEM programs and vehicle launches, aggregating content from over 60 countries' broadcasters; IPTV solutions with over 3 million subscriber households in North America and Latin America, seeing 24% revenue growth. Core solutions like Pay TV have various offerings including IPTV, broadband TV, and TiVo Broadband.

• Revenue outlook: Expected to be in the range of $440 million to $460 million. • Adjusted EBITDA margin: Projected to be between 15% and 17%. • Operating cash flow: Expected to be neutral, plus or minus $10 million. • Stock buyback: Authorization from the Board, with consideration ongoing as part of capital allocation strategy.

• Macro uncertainty, tariffs, and weakening consumer environment impacting customers' decisions, production outlook, and purchasing patterns. • Slower-than-expected IPTV subscriber growth, softer second half automotive production volumes, weaker consumer electronics production and end market demand, and challenging advertising market. • Uncertainty in near-term deal signings from customers due to market conditions.

Q: Looking for clarity on volatility between Q2 and Q3, especially consumer electronics deals and ad market.

A: Jason, uncertainty led to customers being less likely to take longer-term or complete deals in Q2, with deals potentially delayed rather than not signed. Ad market also faces similar uncertainty, which was factored into revised revenue guidance.

Q: Balance between direct sales and new partnerships in ad market.

A: Jon states it will be a combination of both. Direct sales for certain needs like home page ad unit selling, and working with partners to tap into scale as footprint grows to target audiences.

Q: Balance between ad platform growth and monetization, stock buyback.

A: Hamed, MAU footprint is growing on a strong trajectory, and stock buyback authorization from the Board is under review as part of capital allocation strategy.