Xperi Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• Closed 2024 fiscal year strong operationally, making strides in independent media platform strategy across media, pay TV, and connected car.
• Fourth quarter revenue $122M, up 2% adj. for divestitures; adjusted EBITDA $23M (19% margin). Full year adjusted EBITDA margin 15%, more than doubling year over year.
• Achievements: TiVo OS exceeded 2M activated devices in Europe; Sharp shipped TiVo-powered TVs to US; TiVo One ad platform deployed; connected car DTS AutoStage footprint over 10M vehicles; HD Radio in over 110M vehicles; PayTV IPTV subscribers 2.6M.
• 2025 goals: Media platform: >5M active TiVo One devices, ARPU >$10, 10 smart TV partners. PayTV: Activate TiVo One in North America video over broadband, 3M IPTV subs. Connected car: >13M DTS AutoStage vehicles, initiate monetization in NA.

Segment Performance:

• PayTV: Fourth quarter revenue down 8%, with strong growth in IPTV (up 35%) offset by core pay TV decline. Full year revenue up 6% due to IPTV expansion and core pay TV multiyear agreements.
• Consumer Electronics: Fourth quarter up 2% excluding divestitures (due to game console unit volume strength). Full year down 27% excluding AutoSense divestiture, aligning with revenue recognition of 2023 multiyear renewals.
• Connected Car: Fourth quarter up 9% reported, 42% excluding divestitures (due to DTS audio minimum guarantee deals). Full year up 29% excluding AutoSense, driven by DTS audio agreements and HD Radio growth.
• Media Platform: Fourth quarter down 15% due to ad campaign and middleware issues. Full year down 17% primarily from linear TV ad and middleware revenue declines, but achieved 2 million activated devices goal.

Guidance:

• Full year 2025 revenue expected $480M-$500M, midpoint level to modest growth, back half weighted.
• Adjusted EBITDA margin 16%-18%, up from 2024.
• Operating cash flow slightly positive.
• Non-GAAP tax expense ~$20M, capital investments ~$20M, stock-based comp ~$50M.
• Basic and diluted share count ~46M.

Risks:

• Market uncertainties, geopolitical factors, and macroeconomic conditions could impact business performance.
• Risks related to forward-looking statements, where actual results may differ from expectations as detailed in SEC filings.

Q: How to balance adding new OEM partners vs growing volume with existing partners for TiVo OS?

A: Intend to do both, expand share of production with existing partners and work with pipeline of new partners.

Q: Thoughts on ARPU for TiVo One platform in North America vs Europe?

A: Combination of both, ramps through year, driven by combination of TVs with TiVo OS (Europe centric) and video over broadband boxes (U.S. with robust ad market).

Q: Timing of TiVo OS smart TV shipments?

A: Made progress, Sharp shipped to US in Dec, units available in Feb, partners ramping in spring.

Q: Critical variable for success in 2025?

A: TiVo One driving growth to media platform, active users and ARPU metrics.

Q: Monetization of IPTV base today?

A: Traditional context, but moving to TiVo One ad platform for more flexibility.

Q: Rev share between Xperi and operator in IPTV vs TV manufacturer?

A: Some differences, but not material to ARPU generation.

Q: Market change and clarity since last call?

A: Uncertainty still exists, but expectations moderated, guidance range set.

Q: Adding TV OEM partners in 2025?

A: Pipeline in various stages, some advanced, could impact back half of 2025.

Q: Free cash flow positive in 2025?

A: Guided slightly positive operating cash flow, could turn free cash flow positive with good year.

Q: Steps to rollout TiVo One?

A: Working on connecting endpoints, deploying and updating software with partners.

Q: Competitive environment in media platform?

A: Competitive, but Xperi crossed barriers with UX, search, discovery, and business model resonating.