Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Xperi Inc (XPER, Financial) reported a strong performance in pay TV and connected car segments, driven by a large multi-year classic guide minimum guarantee deal.
- The company achieved a 24% adjusted EBITDA margin, more than tripling from the prior year quarter, due to ongoing cost optimization efforts.
- Xperi Inc (XPER) completed the sale of its Autosen and related imaging business, contributing to improved profitability and strategic focus.
- The company is on track to achieve its goal of $20 million monetizable endpoints by the end of 2025, which is expected to generate nearly $200 million of incremental revenue in 2026.
- Xperi Inc (XPER) signed a significant multi-year classic guide renewal with Panasonic, contributing to the long-term economic value of its legacy solutions.
Negative Points
- The macro environment remains mixed, with challenges such as inflation, reduced discretionary spending, and global automotive issues impacting the business.
- There were partner delays in the rollout of Tivo OS smart TVs, shifting some expected monetization revenue from 2024 into 2025.
- Consumer electronics revenue declined by 38% due to market-based softness in certain end products like gaming consoles.
- The connected car segment is experiencing signs of weakness, which may impact the per-unit HD radio business.
- Operating cash flow was a $4 million use of cash, primarily driven by changes in working capital and one-time items.
Q & A Highlights
Q: Can you provide an update on the Tivo OS device shipments and your confidence in reaching the $2 million unit goal by year-end?
A: Jon Kirchner, CEO: We are confident in reaching the $2 million unit goal by year-end. Although some shipments have been delayed into 2025, we have visibility and are seeing accelerating activity. We have a strong pipeline and expect to achieve our goal of $7 million units by the end of 2025.
Q: What is the current status of monetization for Tivo OS, and what are the expected tailwinds as you scale?
A: Jon Kirchner, CEO: Monetization is not yet material due to the small footprint. However, as the footprint grows, we expect to bundle audience segments for advertisers, driving more revenue. The industry trend towards ad-supported viewing supports our strategy.
Q: Are there delays in the North American market for Tivo OS, and what about the European market?
A: Jon Kirchner, CEO: We expect a partner to enter production in late November for the US market, with more presence in 2025. In Europe, delays are related to volume expectations rather than new partner launches. We maintain confidence in our platform's adoption.
Q: Can you elaborate on the softness in the US market and its impact on your business?
A: Robert Andersen, CFO: We are seeing softer demand in areas like gaming consoles and some weakening in automotive volumes. Despite this, we continue to see strategic progress, particularly with our auto stage initiatives.
Q: How do you plan to address the operating cash flow challenges and what is the outlook for next year?
A: Robert Andersen, CFO: The cash flow challenges are due to higher minimum guarantee deals, one-time costs from divestitures, and lower revenue. We expect to collect cash from these deals over time, improving our cash position next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
