Xperi Inc. Q2 FY2026 earnings call

Strategic Pivot Update

• The company is executing a decisive 2026 pivot from multi-year foundation building to accelerated monetization of connected TV (CTV) and automotive audiences, leveraging its large, scalable first-party data asset.
• Current audience scale: over 6 million TiVo One monthly active users, over 3 million global IPTV households, and over 17 million vehicles equipped with DTS AutoStage, creating a sustainable competitive advantage.

Connected TV (TiVo) Operational Progress

• TiVo One monthly active users grew sequentially in Q2, putting the company on track to hit its stated year-end goal of 7 million users.
• The TiVo OS is noted for industry-leading memory efficiency and low bill of materials cost, a key differentiator amid ongoing industry memory and component cost pressures.

Automotive Operational Progress

• Monetization of automotive audiences launched in Q2, with Cumulus signed as the inaugural launch partner for advanced analytics in the DTS AutoStage broadcaster portal, via a subscription licensing model priced based on station count and coverage area.
• BYD joined as the 14th automotive OEM partner for DTS AutoStage, expanding global footprint especially in Europe.

Pay TV Business Progress

• Double-digit growth in the IPTV business continues, offsetting the ongoing decline of the legacy core pay TV segment.

Only partial segment financial data is disclosed in the transcript: Q2 advertising and related revenue increased 54% year over year. The legacy core pay TV segment continues to experience year-over-year decline, accelerated by the company's exit from the hardware business and associated subscription wind-down. The IPTV segment is growing at double-digit rates year over year. Automotive segment revenue saw strong growth in Q2, driven by minimum guarantees from HD Radio deals; minimum guarantees are expected to account for mid-20% of 2026 automotive segment revenue.

• The company expects to hit its year-end 2026 target of 7 million TiVo One monthly active users. TiVo One MAU growth will not be linear, varying based on partner launch timing, retail timing, and sell-through, but the full-year target remains on track.
• Legacy core pay TV decline is expected to be offset by IPTV growth, reaching a balanced position (neutral overall pay TV growth) between mid-2027 and mid-2028.
• Automotive segment full-year 2026 revenue is expected to be up year over year, with minimum guarantees accounting for approximately 25% of full-year 2026 automotive revenue.
• TiVo One ARPU is expected to rise to ~$1 by the end of 2026, driven by expected strong second-half advertising growth, after a slight dip in Q2 from faster MAU expansion relative to near-term revenue growth.

• Automotive unit volumes are exposed to downside risk from broader industry trends including inflation, tariffs, trade disruptions, and ongoing supply chain and memory component constraints.
• TiVo OS user growth is irregular and depends on external partner logistics and retail demand, creating variability in quarterly MAU growth.
• The legacy core pay TV business continues to face headwinds from ongoing market cord-cutting, leading to persistent year-over-year revenue declines.

Q: Following FOX's acquisition of Roku and the prior take-private of Vizio, has the industry void for an independent CTV OS platform created new expansion opportunities for TiVo, and does your low-memory advantage support this? / A: Management confirms the acquisitions validate the strategic value of independent CTV platforms with first-party data and direct consumer access. As a neutral independent with an aligned incentive model for OEMs, content providers and advertisers, the company expects increased partnership and inventory opportunities. Its existing expertise in lightweight, low-memory OS implementation puts it in a strong position to capture new demand from OEMs looking to reduce hardware costs, with near-term investments expected to pay off starting in 2027.

Q: What is the structure and outlook for the Cumulus DTS AutoStage deal, and what does it mean for future broadcaster partnerships? / A: The Cumulus deal is a subscription licensing agreement for access to the DTS AutoStage Broadcaster Portal, priced based on the number of stations and U.S. coverage area. The product was co-developed with input from key broadcast partners over a multi-year period to address unmet needs for radio in-car data. Management notes a strong existing pipeline of broadcaster interest, and expects additional deals following this inaugural launch, driven by demand for the unique near-real-time in-car data generated by the 17 million-vehicle global DTS AutoStage footprint.

Q: What explains the steeper core pay TV decline in Q2, when will IPTV growth offset this decline, and what trends should we expect going forward? / A: The Q2 decline is not anomalous; it reflects ongoing cord-cutting in the legacy market plus the impact of the company's exit from the hardware business, which is reducing associated legacy subscription revenue. IPTV continues to grow at double-digit rates. Management expects the decline in core pay TV to be fully offset by IPTV growth between mid-2027 and mid-2028, after which overall pay TV revenue will shift from decline to neutral or positive growth.

Q: How will the new BYD DTS AutoStage partnership impact quarterly vehicle growth, and what is its strategic significance? / A: As the world's largest EV manufacturer with a large global footprint especially in Europe, BYD will meaningfully accelerate DTS AutoStage vehicle growth, contributing via both over-the-air updates to existing vehicles and inclusion in new models. The partnership expands the company's European growth opportunity for DTS AutoStage data and analytics, and BYD's full adoption sends a strong positive signal to other OEMs considering the platform.