Xperi Inc. — Call Transcript 2025

Good day, everyone. Thank you for standing by. Welcome to the Xperi third quarter 2025 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. Sam, please go ahead. Good afternoon, and thank you for joining us as Xperi reports its third quarter 2025 financial results. With me in today's call are Jon Kirchner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation on our investor relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections, or other statements about future events which are based on management's current expectations and beliefs, and therefore subject to risks, uncertainties, and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31, 2024. And our Form 10-Q for the quarter ended September 30, 2025, to be filed with the SEC. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor relations section of our website. And last, a replay of this conference call will be available on our website shortly after the conclusion of this call. Now I'll turn the call over to Xperi CEO, John Kirchner. Thank you, Sam, and thank you, everyone, for joining us on our third quarter 2025 earnings call. For those new to our story, we're still learning about our business. I'll start this call with a brief overview of the company and our long-term goals. Xperi is a global software and services company that delivers products through our well-known brands, including TiVo, DTS, and HD Radio. Our established and profitable core businesses, which include HD Radio, the digital radio standard in the United States, pay-TV program guides, and audio licensing solutions in home and automotive, have enabled us to build a strategic, connected, and synergistic platform for media monetization. We believe media monetization represents a large and attractive market opportunity, and after investment over the past several years, our growth strategies as an independent media platform are reaching an inflection point. To put that in perspective, it's important to recognize the progress we've made against the ambitious strategic goals we outlined a few years ago. Today, we've either accomplished or are on a path to realize each of our strategic goals, which collectively represent a pivot for our business. And creates a platform that has significant potential to grow and create long-term value. Now, let me provide an overview of the progress we made during the quarter against this year's goals, progress that continues to give us confidence that we are reaching a key inflection point as a business. For media platform footprint, our most critical growth area, we are extremely pleased with the ongoing partner rollout of our TiVo One CTV advertising platform into the U.S. and European markets. We achieved 30% sequential growth to finish with 4.8 million monthly active users at quarter-end. The continued growth of our footprint is instrumental for us to reach larger scale in the U.S. and the larger European countries as we work to expand monetization of the installed base. We also continue to engage new industry partners to help monetize our growing TiVo One user base. In the connected car market, our platform footprint also continued to grow, reaching over 13 million vehicles installed with AutoStage at quarter-end. Importantly, as we have now built meaningful scale, we have initiated collaboration with leading audio media companies to monetize this unique and highly valuable footprint. In our pay-TV business, our video over broadband subscriber count grew 32% year over year to reach 3.2 million subscriber households. We signed important renewals with customers during the quarter that validate the market commitment to our video over broadband technologies and services. Turning to our summary financial results for the quarter, we recorded consolidated revenue of $112 million. As expected, revenue was lower than the prior year period, which had included a large minimum guarantee arrangement with Panasonic in our pay-TV business. In the consumer electronics and connected car markets, we achieved year-over-year growth as planned. Our non-GAAP adjusted operating expenses decreased approximately 20% as compared to the prior year. The decrease was due primarily to our continued focus on cost transformation and from the divestiture of the perceived business in October of last year. Our focus on cost transformation, investment alignment, and improving profitability and cash flow generation has been an ongoing effort at the company. Concurrently with today's earnings release, we announced a workforce reduction of 250 employees spanning the entire business. For the third quarter, we posted 28 cents of non-GAAP earnings per share, achieved positive operating cash flow of $8 million, and recorded our second consecutive quarter of positive free cash flow at $2 million. Turning now to the media platform business. I noted earlier that we have reached 4.8 million monthly active users on the TiVo One platform. A key indicator for our business performance and one that continued to increase over the first month of the fourth quarter. Notably, more than 75% of this footprint is located in the U.S. and the five largest countries in Europe. Consumer and retailer feedback on TVs with the TiVo OS operating system continues to be very positive, and TiVos powered by TiVo are available at a range of sizes and price points. For example, a number of recent retailer promotions in the U.K. have highlighted aggressive low pricing for TVs that feature TiVo OS, which we expect will further expand our footprint in that market. Also, in addition to Sharp, a second brand partner is in production and expected to deliver TVs powered by TiVo to certain U.S. retailers before year-end. We expect U.S. distribution of smart TVs powered by TiVo to scale next year and represent national coverage by the second half of 2026. We're also pleased to announce our 10th TiVo OS TV partnership with the signing of a European brand for a leading Asia-based original device manufacturer. This further validates the strong OEM interest in our cost-effective, built-for-TV independent platform across a range of partners. We believe large OEMs without their own operating system, leading retail house brands, and ODM producers all see unique value in being able to brand the experience, retain their first-party engagement data, and participate in long-term monetization. Given the significant progress we've made in establishing footprint for our TiVo One advertising platform across many brands, we believe now would be an appropriate time to start reporting another key performance indicator: average revenue per user for TiVo One, or ARPU. Our definition for ARPU is consistent with industry practice, and we calculate it by dividing the trailing four quarters of monetization revenue within the media platform business by the average number of TiVo One monthly active users during that same period. Our monetization revenue includes all advertising and data monetization revenue from the TiVo One platform and from other parts of our media platform business. Our calculated ARPU for TiVo One at the end of the quarter was $8.75. Which is approaching the $10 goal we are working toward as we exit 2025. And a metric that over time we expect to continue to grow to north of $20. ARPU growth is not expected to be linear as it is impacted by not only monetization revenue but changes in our underlying footprint and in what quarters more unit growth comes online. To help further our goal of growing ARPU for TiVo One in the periods ahead, we recently signed multiple monetization partnerships, including agreements with Titan Ads, a CTV industry leader across key E.U. markets; Kargo, a leading CTV ad reseller in the United States; and Comscore, a U.S.-based media measurement leader. Moving to connected car, we continue to grow our footprint for DTS AutoStage and had more than 13 million vehicles using this unique platform at quarter-end, the vast majority of which are in North America. While this initial footprint is focused primarily on audio and data solutions, we also secured two new video-based AutoStage OEM programs in the quarter. One in Europe and one in Asia. Over the past two weeks, we announced and launched an updated version of the DTS AutoStage broadcaster portal, the world's first global in-car radio audience measurement platform. This gives radio broadcasters insights into listening patterns, allows stations to fine-tune programming in near real time, and delivers advertisers' accurate measurement of the audience engagement across 250 designated market areas. This level of measurement has traditionally only been available on digital streaming platforms and enables radio stations to deliver higher value to advertisers. The technology and scale of the platform has been years in development. We have now initiated commercial discussions around measurement and data licensing with leading broadcasters and media companies to very strong interest across the industry. Separately, as AutoStage has reached significant scale, we also initiated collaboration with leading audio media companies in the U.S. and U.K. to launch targeted advertising trials on the platform. We expect these ultimate partnerships will form the basis of additional revenue streams for advertising and data. In terms of HD radio expansion, several new radio stations went on the air with HD radio digital broadcasting. New vehicle models were launched by companies such as Audi, Hyundai, Tesla, Mercedes-Benz, and Lexus during the quarter. Notably, we also signed a significant multi-year HD radio contract with a large Asia-based tier-one supplier, which is expected to help HD radio continue to grow with Japanese car brands. Moving to our pay-TV business, in the third quarter, IPTV subscribers increased 32% year over year, reaching 3.2 million households. Revenue was up 18% year over year from a mix of subscriber growth in the U.S. and Latin America. We renewed the agreement with NCTC, the National Content and Technology Cooperative, covering over 70 operators in the U.S. This agreement guarantees IPTV subscriber commitments for four more years and encourages operators to launch and scale broadband TV. During the quarter, we continued to see strong interest from video over broadband operators to extend their video offerings with new, more cost-effective OTT video service bundles. As a result, by quarter-end, over 40 operators had committed to our TiVo broadband product, and over 100,000 households had activated. We secured a multi-year renewal with Mitchell Seaforth Cable TV, or MSC, a key partnership that impacts multiple operators in Canada and which is expected to drive our continued subscriber growth there. Lastly, at the beginning of October, we exited the DVR hardware business under the TiVo brand. Closing one innovative and industry-changing chapter in the company's history. The TiVo brand will continue to empower consumers to find, watch, and enjoy the content they love on innovative video over broadband and smart TV solutions. Let me next cover highlights in our consumer electronics business. During the quarter, we renewed a multi-year contract with Vestel to deploy DTS audio solutions across its TV brands. Vestel is the largest television manufacturer in Europe and an important customer and partner to Xperi, given their volumes across many brands. In our IMAX Enhanced initiative, a partnership with IMAX that brings the signature IMAX experience into the living room, we expanded our contract with Sony Pictures to release hundreds of additional titles in the IMAX Enhanced format, coupled with DTS:X immersive audio. These titles will be available for direct distribution through free ad-supporting streaming television. We believe providing free access to the IMAX Enhanced experience offers unique value for consumers and will help our program licensing partners further differentiate their IMAX Enhanced products. We also expanded the IMAX Enhanced program in the home projector category through new agreements with Optoma and Epson. To wrap up what we've discussed today, our strategic progress is evident against the growth goals we set for the year. Within media platform. We expect to finish the year above 5 million monthly active users on our TiVo One platform. Further, we've achieved our goal of signing two additional partners to reach a total of 10 TiVo OS partners. The ARPU that we announced today of $8.75 brings us closer to our year-end goal of $10. And importantly, we've made progress in securing advertising partnerships that we expect will enable us to monetize our expanding and valuable footprint. For pay-TV, we've had considerable success in activating TiVo One through updates in North America on video over broadband devices. This effort helps us build scale in the U.S. market to further our monetization efforts. We also achieved our goal of over 3 million subscriber households in our IPTV footprint. Within connected car, we've surpassed 13 million vehicles with AutoStage and expect this large and unique footprint to continue growing as new cars enter the market. Also, we've started collaborations with leading audio media companies in the U.S. and the U.K. to launch targeted advertising trials on the AutoStage platform. In summary, we're confident this strategic progress sets us up for long-term growth, improved profitability, and increased cash flow. Let me now turn the call over to Robert to discuss our financial results. Robert? Thanks, John. I will start by reviewing the revenue results for the quarter. When excluding the impact of the perceived divestiture, overall revenue was lower by $20 million compared to last year, as expected, due to a large multi-year minimum guarantee agreement with Panasonic recorded in the prior year period. Looking at each of our primary markets, pay-TV was lower than last year by 32 million, or 39%. Due primarily to last year's Panasonic agreement. Excluding all minimum guarantee agreements from the prior year period. Pay-TV would have decreased on a percentage basis in the high single digits consistent with the overall market. For IPTV, revenue grew approximately $4 million, or 18%. As subscribers continued to grow at a brisk pace, particularly in Latin America. For the consumer electronics market. Excluding the impact of the perceived divestiture, revenue grew by $3 million, or 20%. Due to a higher level of new agreements this year, along with higher revenue on a per-unit basis from audio technologies in game consoles. In connected car, revenue was up by $9 million, or 36%, due to a higher level of long-term arrangements in this year's number. Including the significant Asia-based program that John mentioned earlier. Revenue in media platform was approximately flat on a year-over-year basis. Turning to the income statement, our year-over-year revenue increased by approximately $2 million, driven by higher costs related to long-term arrangements recorded in the quarter. Non-GAAP adjusted operating expense decreased by $16 million, or approximately 20%. Primarily due to reduced personnel expense as a result of our ongoing business transformation efforts, and also from last year's divestiture of perceived at the beginning of the fourth quarter. Our adjusted EBITDA was $23 million. A 21% adjusted EBITDA margin, down from last year's 31 million, as our expense decrease was more than offset by the lower revenue year-over-year. Our non-GAAP earnings per share was $0.28 cents, compared to the $0.51 cents we posted in the third quarter last year. From a balance sheet perspective, we finished the quarter with $97 million of cash and cash equivalents up $2 million from last quarter, due to the positive free cash flow of $2 million generated in the quarter. Notably, operating cash flow was approximately $8 million in the quarter, an increase of over $12 million from the same quarter last year, due primarily to the absence this year of transaction costs related to the perceived divestiture and other restructuring costs that occurred last year. Turning now to our financial outlook, I'd like to cover two topics that are related to our outlook. First, minimum guarantee arrangements with customers, and second, the workforce reduction that we announced today. Beginning with minimum guarantee arrangements, which for simplicity, I'll refer to as MGs. We enter into MGs with our customers to lock in certainty of value, ensure usage of the technology over multiple years and product cycles, and to lower the company's service costs. As discussed on previous calls, the accounting standard for MGs creates difficult revenue comparisons on a quarterly basis. Since revenue is required to be recognized when the agreement is signed. The amount of revenue is generally recorded as an unbilled receivable on the balance sheet, and cash is collected over the term of the agreement. Arrangements average three years in length, and cash is received when customers are billed quarterly over the duration. We have entered into MGs over many years for audio technologies within consumer electronics and have more recently seen customer interest in MGs in pay-TV and connected car, as they offer customers benefits in product planning, supply chain management, and pricing. As a percentage of revenue, MGs comprised just over 20% of total revenue in 2024. And are expected to be in the low 20% range for 2025. Importantly, these MGs are term-based arrangements that are typically renewed when the contract expires. For example, over the past two years, approximately 90%. Of the annualized dollar value of expiring contracts has been renewed. As such, we consider MG contracts to be ordinary course of business. And reoccurring revenue. While MGs may cause comparability issues from one quarter to the next, we believe the locking in of key customers, revenue, and predictable cash flows, all with a high probability of renewal, has significant strategic value for our business. Over the next two years, as our business continues to move toward greater monetization and advertising revenue, we expect MGs to decrease as a percentage of overall revenue. On the second topic, we announced concurrently with today's release that we are reducing our workforce by approximately 250 people across the company. This action will impact all business and functional areas and represents approximately 15% of our workforce. We view this as an important step to improve profitability and cash flow generation while enabling continued investment in our primary growth areas. We expect to incur a one-time expense of between $16 to $18 million of restructuring and related charges. Primarily for employee severance and related costs, and substantially all of which will be completed by the end of the first half of 2026. We expect that these reductions, once completed, will generate savings of $30 million-$35 million on an annualized basis. These expense reductions are intended to help offset an expected revenue mix shift as our media platform expands in 2026, which we expect will initially have higher cost of sales than other parts of our business. Turning now to our outlook for 2025, we are reiterating our annual revenue guidance range of $440 million-$460 million. And our adjusted EBITDA margin of 15% to 17%. While we expect to incur certain cash charges associated with the restructuring of our workforce, we also expect some cash savings in the quarter as employees depart. As such, we are not changing our outlook for operating cash flow, which is still expected to be neutral, plus or minus $10 million. Looking ahead, while we are not providing 2026 guidance at this point. Our preliminary view is broadly consistent with consensus estimates for next year. We plan to share a more formal outlook for 2026 when we report our fourth quarter results. That concludes our prepared remarks. Let's now open up the call for questions. Operator. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star one again. We will pause for just a moment to assemble our Q&A. And your first question comes from the line of Matthew Galinko with Maxine Group. Please go ahead. Hi. Thanks for taking my questions. Can you maybe touch on the pieces that drive the initially lower gross margin. In the media platform business that scales and. Sort of how long do you expect to kind of operate at a lower margin before you reach kind of your terminal or a mature margin? Well, I think there's a couple of things going on. There is. A. Semi-fixed cost of operating a platform as you start to. Grow that business. And so that will. Hit things harder. Initially, but as you build scale, your marginal. Advertising dollars. Will obviously come through at a higher margin. There are also various deals that we have done pretty customarily. That help us ensure there's plenty of content on the platform and whatnot and other market, what I'll call market incentives, so that as revenue starts to emerge. Within that business, some of those costs will be recognized. So I think it's elements like that. But. We have a very strong belief that. Over time, as you certainly build significantly more revenue scale, that you will see margin acceleration in that business. Got it. Thanks. And I guess as a follow-up, as you begin to deliver. Targeted ads to automotive. Do you expect a similar kind of individual. Fixed cost base that you need to clear before. Contributing at a higher margin level, or is that kind of all amortized through the same. Fixed cost as you do kind of on the traditional side? I mean, I would say it's more of the latter. It's kind of part and parcel to. The platform we've been working on for some time. And I think the way to think about. The opportunity there is that. We are unlocking a level of. Measurement that. Currently does not exist in radio broadcast. And. The interest around being able to run. Targeting and measurement in that space is very high. It's obviously a sizable business. And has been for a long time. But what we've been able to do now is we've finished some of the. Platform development work, and we've also seen the scale get to the point where we can offer, I think, a very compelling solution to various partners, whether it be for data. Or for advertising. I think we are, and this was part of the, I think we're turning the corner into a really interesting next chapter as we look ahead over the next 12 to 24 months. And this is something that we've been working towards for some time, part of the broader vision, but it is great to see it coming together. Great. Thank you. And the next question comes from the line of Steve Frankel with Rosenblatt. Please go ahead. Well, good afternoon, John. Congratulations on the progress in starting to scale the business. Maybe help me with a couple of numbers. For starters. I appreciate the TiVo MAU progress, but maybe tell us where that was last year in the third and fourth quarters so we can gauge it going forward. Well, that's a good question. I don't have that exact number off the top of my head. Is your question from a geographic standpoint, Steve? Or total MAUs? Total MAUs. Much smaller. It has grown significantly. So. In the low millions. Very low millions. And do you know what ARPU was last quarter? So the 875 compares to what was the most recent data point that you gave out on that. It's not one we have at our fingertips here, but I think it's fair to say that it would be, I believe. Probably a pretty similar number. This happens when you do a 12-month look back when you're calculating the average revenue per user, and your. Denominator actually ends up being pretty small. So we're looking at all of our monetization revenue as a business from both TiVo One and from other parts of our business. I think the expectation, Steve, is that as you start to see more monetization happening, particularly as you look into 2026 and beyond, you'll start to see that number move. Northward. Although, as we said, it won't necessarily be linear because there's. Two things going on in that calculation. The speed at which stuff is coming online in any given quarter. Relative to. Various. Monetization-related deals you may be doing in any particular given quarter. Okay. Let me take a different tack then. TiVo One is scaling up nicely. What is the critical mass you need to have meaningful. Ad revenue generated on that platform? Are we halfway there, or? Let me kind of answer, I think, the. Bigger question, and then I'll maybe come back to another one. The answer is we expect to see. Material progress on the platform we have and based on the visibility that we have into 2026. Footprint growth. We expect that to occur in 2026. So we feel very good about that. The question of how much do you need to have, generally speaking, scale is important. To advertisers, and the scale number is kind of different based on market. So it's different for the U.K. than it is for Germany or the U.S. for that matter. But one of the things that we are doing very proactively to address the fact that in places where scale may not fully exist immediately or even in the near term where people. Let's call it some advertisers might ideally want it. That is pursuing partnerships where people can bring other footprint in conjunction with our inventory and successfully sell it. And I think, as we've said, we've announced a number of partnerships that I think do two things. It helps provide some of that scale. Obviously, it helps get our inventory into various selling pipelines without having to take lots of extra time to build out those pipelines as well from an ad sales perspective. But I think more than anything, it speaks to. The fact that there is real interest in the industry in our. Inventory and footprint. And as. These partners who. Obviously deal in this space and have for some time are keen to. Engage with us to enter those partnerships and take it forward in conjunction with us. So we're not outsourcing everything we're doing on the platform. It's we're finding strategic partners in different ways and places so that we can augment and accelerate the revenue. Growth efforts. Okay. And then. Yeah. It seems very exciting that you're making progress with AutoStage and early discussions around monetizing that. Do you think that revenue becomes material. Kind of exiting 2026, or are we going to think about 2027 when that platform is a monetization machine? I think the trial, Steve, will play out through 2026, and I certainly expect to see revenue off the platform in 2026, but I think it's going to be more material in 2027. Great. Thank you so much. Thank you. And the next question comes from the line of Hamed Khorsand with BWS Financial. Please go ahead. Hey, could you just talk a little bit more about these minimum guarantees and how it's becoming—you're saying it's going to be more than 20% of 2025 revenue. Is that because of. The competitive necessity that you have to provide such deals? I think there's multiple things going on, Hamed, and I think Robert touched on some of them in the script. You've got. Partners. In many cases, interested in trying to. Have very clear kind of windows on how they think about what technology they're including in their platforms. They obviously manage their supply chains also, in some cases, looking for. Greater certainty and not having to deal with. Potential renegotiations. And on the flip side, we are in a similar. Place. Where. We look out, and there's certainly some uncertainty in the market in these spaces. And to the extent that we can lock in our technology into various platforms for longer periods of time, it lowers our service cost, gives us greater predictability. And I think the key point about them is that. They're not. One and done. They're just—it's kind of—it's a slightly different, more committed structure to our technology. And our solutions. The only thing that's different about it is the accounting standards require you to recognize the revenue a little bit differently than you would on a pure as-you-go. Type. Licensing reporting basis. So I think there's clear benefits on both sides. And obviously, visibility on both sides being one of the key ones. Was minimum guarantee a reason why the Connecticut car revenue jumped this quarter? Yes. We had a higher level of minimum guarantees. This quarter than we had last year. Okay. And my last question is, when would you see platform revenue stabilize? It seems like it's quite volatile quarter over quarter. Can you define what you mean by platform? Well, the media platform, sorry. The media revenue, yeah. Yeah. I think as you start to see meaningful growth in 2026, you'll see less volatility, which has to do with some of the existing, what I'll call, underlying. Parts of that number. So it'll take on more stability. Over time as the number grows. Okay. I think if I can add on there, given that we recognize our advertising, as we synonymously call it, monetization in media platform for the TiVo One. Growth, we expect that to be a grower next year and going forward. Okay. Thank you. You're welcome. And we have no further questions at this time. I would like to turn it back to John Kirchner for closing remarks. Thanks, operator. We're pleased with the meaningful progress we've made in achieving nearly all of our 2025 strategic goals ahead of schedule. I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. We look forward to sharing further updates on our year-end call. Thanks, everyone, for joining us today. Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Speaker 6: Good day, everyone. Thank you for standing by. Welcome to the Xperi third quarter 2025 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. Sam, please go ahead. Good day, everyone. good day everyone Thank you for standing by. thank you for standing by Welcome to the Xperi third quarter 2025 earnings conference call. welcome to the xperi third quarter 2025 earnings conference call During today's presentation, all parties will be in a listen-only mode. during today's presentation all parties will be in a listen-only mode Following the presentation, the call will be open for questions. following the presentation the call will be open for questions I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. i would now like to turn the call over to sam levenson from arbor advisory group Sam, please go ahead. sam please go ahead

Speaker 2: Good afternoon, and thank you for joining us as Xperi reports its third quarter 2025 financial results. With me in today's call are Jon Kirchner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation on our investor relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections, or other statements about future events which are based on management's current expectations and beliefs, and therefore subject to risks, uncertainties, and changes in circumstances. Good afternoon, and thank you for joining us as Xperi reports its third quarter 2025 financial results. good afternoon and thank you for joining us as xperi reports its third quarter 2025 financial results With me in today's call are Jon Kirchner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer. with me in today's call are jon kirchner chief executive officer and robert andersen chief financial officer In addition to today's earnings release, there is an earnings presentation on our investor relations website at investor.xperi.com. in addition to today's earnings release there is an earnings presentation on our investor relations website at investor.xperi.com We encourage you to download the presentation and follow along with today's commentary. we encourage you to download the presentation and follow along with today's commentary Before we begin, I would like to provide a few reminders. before we begin i would like to provide a few reminders First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. first i would like to note that unless otherwise stated all comparisons are to the same period in the prior year Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections, or other statements about future events which are based on management's current expectations and beliefs, and therefore subject to risks, uncertainties, and changes in circumstances. second today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions projections or other statements about future events which are based on management's current expectations and beliefs and therefore subject to risks uncertainties and changes in circumstances For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31, 2024. And our Form 10-Q for the quarter ended September 30, 2025, to be filed with the SEC. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor relations section of our website. And last, a replay of this conference call will be available on our website shortly after the conclusion of this call. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31, 2024. for more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today please refer to the risk factors and md&a sections in our sec filings including our most recent form 10-k for the year ended december 31 2024 And our Form 10-Q for the quarter ended September 30, 2025, to be filed with the SEC. and our form 10-q for the quarter ended september 30 2025 to be filed with the sec Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call Third, we refer to certain non-GAAP financial measures which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor relations section of our website. third we refer to certain non-gaap financial measures which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable gaap measures which can be found in the investor relations section of our website And last, a replay of this conference call will be available on our website shortly after the conclusion of this call. and last a replay of this conference call will be available on our website shortly after the conclusion of this call Now I'll turn the call over to Xperi CEO, John Kirchner. Now I'll turn the call over to Xperi CEO, John Kirchner. now i'll turn the call over to xperi ceo john kirchner

Speaker 7: Thank you, Sam, and thank you, everyone, for joining us on our third quarter 2025 earnings call. For those new to our story, we're still learning about our business. I'll start this call with a brief overview of the company and our long-term goals. Xperi is a global software and services company that delivers products through our well-known brands, including TiVo, DTS, and HD Radio. Our established and profitable core businesses, which include HD Radio, the digital radio standard in the United States, pay-TV program guides, and audio licensing solutions in home and automotive, have enabled us to build a strategic, connected, and synergistic platform for media monetization. We believe media monetization represents a large and attractive market opportunity, and after investment over the past several years, our growth strategies as an independent media platform are reaching an inflection point. Thank you, Sam, and thank you, everyone, for joining us on our third quarter 2025 earnings call. thank you sam and thank you everyone for joining us on our third quarter 2025 earnings call For those new to our story, we're still learning about our business. for those new to our story we're still learning about our business I'll start this call with a brief overview of the company and our long-term goals. i'll start this call with a brief overview of the company and our long-term goals Xperi is a global software and services company that delivers products through our well-known brands, including TiVo, DTS, and HD Radio. xperi is a global software and services company that delivers products through our well-known brands including tivo dts and hd radio Our established and profitable core businesses, which include HD Radio, the digital radio standard in the United States, pay-TV program guides, and audio licensing solutions in home and automotive, have enabled us to build a strategic, connected, and synergistic platform for media monetization. our established and profitable core businesses which include hd radio the digital radio standard in the united states pay-tv program guides and audio licensing solutions in home and automotive have enabled us to build a strategic connected and synergistic platform for media monetization We believe media monetization represents a large and attractive market opportunity, and after investment over the past several years, our growth strategies as an independent media platform are reaching an inflection point. we believe media monetization represents a large and attractive market opportunity and after investment over the past several years our growth strategies as an independent media platform are reaching an inflection point To put that in perspective, it's important to recognize the progress we've made against the ambitious strategic goals we outlined a few years ago. Today, we've either accomplished or are on a path to realize each of our strategic goals, which collectively represent a pivot for our business. And creates a platform that has significant potential to grow and create long-term value. Now, let me provide an overview of the progress we made during the quarter against this year's goals, progress that continues to give us confidence that we are reaching a key inflection point as a business. For media platform footprint, our most critical growth area, we are extremely pleased with the ongoing partner rollout of our TiVo One CTV advertising platform into the U.S. and European markets. We achieved 30% sequential growth to finish with 4.8 million monthly active users at quarter-end. To put that in perspective, it's important to recognize the progress we've made against the ambitious strategic goals we outlined a few years ago. to put that in perspective it's important to recognize the progress we've made against the ambitious strategic goals we outlined a few years ago Today, we've either accomplished or are on a path to realize each of our strategic goals, which collectively represent a pivot for our business. today we've either accomplished or are on a path to realize each of our strategic goals which collectively represent a pivot for our business And creates a platform that has significant potential to grow and create long-term value. and creates a platform that has significant potential to grow and create long-term value Now, let me provide an overview of the progress we made during the quarter against this year's goals, progress that continues to give us confidence that we are reaching a key inflection point as a business. now let me provide an overview of the progress we made during the quarter against this year's goals progress that continues to give us confidence that we are reaching a key inflection point as a business For media platform footprint, our most critical growth area, we are extremely pleased with the ongoing partner rollout of our TiVo One CTV advertising platform into the U.S. and European markets. for media platform footprint our most critical growth area we are extremely pleased with the ongoing partner rollout of our tivo one ctv advertising platform into the u.s and european markets We achieved 30% sequential growth to finish with 4.8 million monthly active users at quarter-end. we achieved 30% sequential growth to finish with 4.8 million monthly active users at quarter-end The continued growth of our footprint is instrumental for us to reach larger scale in the U.S. and the larger European countries as we work to expand monetization of the installed base. We also continue to engage new industry partners to help monetize our growing TiVo One user base. In the connected car market, our platform footprint also continued to grow, reaching over 13 million vehicles installed with AutoStage at quarter-end. Importantly, as we have now built meaningful scale, we have initiated collaboration with leading audio media companies to monetize this unique and highly valuable footprint. In our pay-TV business, our video over broadband subscriber count grew 32% year over year to reach 3.2 million subscriber households. We signed important renewals with customers during the quarter that validate the market commitment to our video over broadband technologies and services. The continued growth of our footprint is instrumental for us to reach larger scale in the U.S. and the larger European countries as we work to expand monetization of the installed base. the continued growth of our footprint is instrumental for us to reach larger scale in the u.s and the larger european countries as we work to expand monetization of the installed base We also continue to engage new industry partners to help monetize our growing TiVo One user base. we also continue to engage new industry partners to help monetize our growing tivo one user base In the connected car market, our platform footprint also continued to grow, reaching over 13 million vehicles installed with AutoStage at quarter-end. in the connected car market our platform footprint also continued to grow reaching over 13 million vehicles installed with autostage at quarter-end Importantly, as we have now built meaningful scale, we have initiated collaboration with leading audio media companies to monetize this unique and highly valuable footprint. importantly as we have now built meaningful scale we have initiated collaboration with leading audio media companies to monetize this unique and highly valuable footprint In our pay-TV business, our video over broadband subscriber count grew 32% year over year to reach 3.2 million subscriber households. in our pay-tv business our video over broadband subscriber count grew 32% year over year to reach 3.2 million subscriber households We signed important renewals with customers during the quarter that validate the market commitment to our video over broadband technologies and services. we signed important renewals with customers during the quarter that validate the market commitment to our video over broadband technologies and services Turning to our summary financial results for the quarter, we recorded consolidated revenue of $112 million. As expected, revenue was lower than the prior year period, which had included a large minimum guarantee arrangement with Panasonic in our pay-TV business. In the consumer electronics and connected car markets, we achieved year-over-year growth as planned. Our non-GAAP adjusted operating expenses decreased approximately 20% as compared to the prior year. The decrease was due primarily to our continued focus on cost transformation and from the divestiture of the perceived business in October of last year. Our focus on cost transformation, investment alignment, and improving profitability and cash flow generation has been an ongoing effort at the company. Concurrently with today's earnings release, we announced a workforce reduction of 250 employees spanning the entire business. Turning to our summary financial results for the quarter, we recorded consolidated revenue of $112 million. turning to our summary financial results for the quarter we recorded consolidated revenue of $112 million As expected, revenue was lower than the prior year period, which had included a large minimum guarantee arrangement with Panasonic in our pay-TV business. as expected revenue was lower than the prior year period which had included a large minimum guarantee arrangement with panasonic in our pay-tv business In the consumer electronics and connected car markets, we achieved year-over-year growth as planned. in the consumer electronics and connected car markets we achieved year-over-year growth as planned Our non-GAAP adjusted operating expenses decreased approximately 20% as compared to the prior year. our non-gaap adjusted operating expenses decreased approximately 20% as compared to the prior year The decrease was due primarily to our continued focus on cost transformation and from the divestiture of the perceived business in October of last year. the decrease was due primarily to our continued focus on cost transformation and from the divestiture of the perceived business in october of last year Our focus on cost transformation, investment alignment, and improving profitability and cash flow generation has been an ongoing effort at the company. our focus on cost transformation investment alignment and improving profitability and cash flow generation has been an ongoing effort at the company Concurrently with today's earnings release, we announced a workforce reduction of 250 employees spanning the entire business. concurrently with today's earnings release we announced a workforce reduction of 250 employees spanning the entire business For the third quarter, we posted 28 cents of non-GAAP earnings per share, achieved positive operating cash flow of $8 million, and recorded our second consecutive quarter of positive free cash flow at $2 million. Turning now to the media platform business. I noted earlier that we have reached 4.8 million monthly active users on the TiVo One platform. A key indicator for our business performance and one that continued to increase over the first month of the fourth quarter. Notably, more than 75% of this footprint is located in the U.S. and the five largest countries in Europe. Consumer and retailer feedback on TVs with the TiVo OS operating system continues to be very positive, and TiVos powered by TiVo are available at a range of sizes and price points. For example, a number of recent retailer promotions in the U.K. For the third quarter, we posted 28 cents of non-GAAP earnings per share, achieved positive operating cash flow of $8 million, and recorded our second consecutive quarter of positive free cash flow at $2 million. for the third quarter we posted 28 cents of non-gaap earnings per share achieved positive operating cash flow of $8 million and recorded our second consecutive quarter of positive free cash flow at $2 million Turning now to the media platform business. turning now to the media platform business I noted earlier that we have reached 4.8 million monthly active users on the TiVo One platform. i noted earlier that we have reached 4.8 million monthly active users on the tivo one platform A key indicator for our business performance and one that continued to increase over the first month of the fourth quarter. a key indicator for our business performance and one that continued to increase over the first month of the fourth quarter Notably, more than 75% of this footprint is located in the U.S. and the five largest countries in Europe. notably more than 75% of this footprint is located in the u.s and the five largest countries in europe Consumer and retailer feedback on TVs with the TiVo OS operating system continues to be very positive, and TiVos powered by TiVo are available at a range of sizes and price points. consumer and retailer feedback on tvs with the tivo os operating system continues to be very positive and tivos powered by tivo are available at a range of sizes and price points For example, a number of recent retailer promotions in the U.K. for example a number of recent retailer promotions in the u.k have highlighted aggressive low pricing for TVs that feature TiVo OS, which we expect will further expand our footprint in that market. Also, in addition to Sharp, a second brand partner is in production and expected to deliver TVs powered by TiVo to certain U.S. retailers before year-end. We expect U.S. distribution of smart TVs powered by TiVo to scale next year and represent national coverage by the second half of 2026. We're also pleased to announce our 10th TiVo OS TV partnership with the signing of a European brand for a leading Asia-based original device manufacturer. This further validates the strong OEM interest in our cost-effective, built-for-TV independent platform across a range of partners. have highlighted aggressive low pricing for TVs that feature TiVo OS, which we expect will further expand our footprint in that market. have highlighted aggressive low pricing for tvs that feature tivo os which we expect will further expand our footprint in that market Also, in addition to Sharp, a second brand partner is in production and expected to deliver TVs powered by TiVo to certain U.S. retailers before year-end. also in addition to sharp a second brand partner is in production and expected to deliver tvs powered by tivo to certain u.s retailers before year-end We expect U.S. distribution of smart TVs powered by TiVo to scale next year and represent national coverage by the second half of 2026. we expect u.s distribution of smart tvs powered by tivo to scale next year and represent national coverage by the second half of 2026 We're also pleased to announce our 10th TiVo OS TV partnership with the signing of a European brand for a leading Asia-based original device manufacturer. we're also pleased to announce our 10th tivo os tv partnership with the signing of a european brand for a leading asia-based original device manufacturer This further validates the strong OEM interest in our cost-effective, built-for-TV independent platform across a range of partners. this further validates the strong oem interest in our cost-effective built-for-tv independent platform across a range of partners We believe large OEMs without their own operating system, leading retail house brands, and ODM producers all see unique value in being able to brand the experience, retain their first-party engagement data, and participate in long-term monetization. Given the significant progress we've made in establishing footprint for our TiVo One advertising platform across many brands, we believe now would be an appropriate time to start reporting another key performance indicator: average revenue per user for TiVo One, or ARPU. Our definition for ARPU is consistent with industry practice, and we calculate it by dividing the trailing four quarters of monetization revenue within the media platform business by the average number of TiVo One monthly active users during that same period. Our monetization revenue includes all advertising and data monetization revenue from the TiVo One platform and from other parts of our media platform business. We believe large OEMs without their own operating system, leading retail house brands, and ODM producers all see unique value in being able to brand the experience, retain their first-party engagement data, and participate in long-term monetization. we believe large oems without their own operating system leading retail house brands and odm producers all see unique value in being able to brand the experience retain their first-party engagement data and participate in long-term monetization Given the significant progress we've made in establishing footprint for our TiVo One advertising platform across many brands, we believe now would be an appropriate time to start reporting another key performance indicator: average revenue per user for TiVo One, or ARPU. given the significant progress we've made in establishing footprint for our tivo one advertising platform across many brands we believe now would be an appropriate time to start reporting another key performance indicator average revenue per user for tivo one or arpu Our definition for ARPU is consistent with industry practice, and we calculate it by dividing the trailing four quarters of monetization revenue within the media platform business by the average number of TiVo One monthly active users during that same period. our definition for arpu is consistent with industry practice and we calculate it by dividing the trailing four quarters of monetization revenue within the media platform business by the average number of tivo one monthly active users during that same period Our monetization revenue includes all advertising and data monetization revenue from the TiVo One platform and from other parts of our media platform business. our monetization revenue includes all advertising and data monetization revenue from the tivo one platform and from other parts of our media platform business Our calculated ARPU for TiVo One at the end of the quarter was $8.75. Which is approaching the $10 goal we are working toward as we exit 2025. And a metric that over time we expect to continue to grow to north of $20. ARPU growth is not expected to be linear as it is impacted by not only monetization revenue but changes in our underlying footprint and in what quarters more unit growth comes online. To help further our goal of growing ARPU for TiVo One in the periods ahead, we recently signed multiple monetization partnerships, including agreements with Titan Ads, a CTV industry leader across key E.U. markets; Kargo, a leading CTV ad reseller in the United States; and Comscore, a U.S.-based media measurement leader. Our calculated ARPU for TiVo One at the end of the quarter was $8.75. our calculated arpu for tivo one at the end of the quarter was $8.75 Which is approaching the $10 goal we are working toward as we exit 2025. which is approaching the $10 goal we are working toward as we exit 2025 And a metric that over time we expect to continue to grow to north of $20. and a metric that over time we expect to continue to grow to north of $20 ARPU growth is not expected to be linear as it is impacted by not only monetization revenue but changes in our underlying footprint and in what quarters more unit growth comes online. arpu growth is not expected to be linear as it is impacted by not only monetization revenue but changes in our underlying footprint and in what quarters more unit growth comes online To help further our goal of growing ARPU for TiVo One in the periods ahead, we recently signed multiple monetization partnerships, including agreements with Titan Ads, a CTV industry leader across key E.U. markets; Kargo, a leading CTV ad reseller in the United States; and Comscore, a U.S.-based media measurement leader. to help further our goal of growing arpu for tivo one in the periods ahead we recently signed multiple monetization partnerships including agreements with titan ads a ctv industry leader across key e.u markets kargo a leading ctv ad reseller in the united states and comscore a u.s.-based media measurement leader Moving to connected car, we continue to grow our footprint for DTS AutoStage and had more than 13 million vehicles using this unique platform at quarter-end, the vast majority of which are in North America. While this initial footprint is focused primarily on audio and data solutions, we also secured two new video-based AutoStage OEM programs in the quarter. One in Europe and one in Asia. Over the past two weeks, we announced and launched an updated version of the DTS AutoStage broadcaster portal, the world's first global in-car radio audience measurement platform. This gives radio broadcasters insights into listening patterns, allows stations to fine-tune programming in near real time, and delivers advertisers' accurate measurement of the audience engagement across 250 designated market areas. This level of measurement has traditionally only been available on digital streaming platforms and enables radio stations to deliver higher value to advertisers. Moving to connected car, we continue to grow our footprint for DTS AutoStage and had more than 13 million vehicles using this unique platform at quarter-end, the vast majority of which are in North America. moving to connected car we continue to grow our footprint for dts autostage and had more than 13 million vehicles using this unique platform at quarter-end the vast majority of which are in north america While this initial footprint is focused primarily on audio and data solutions, we also secured two new video-based AutoStage OEM programs in the quarter. while this initial footprint is focused primarily on audio and data solutions we also secured two new video-based autostage oem programs in the quarter One in Europe and one in Asia. one in europe and one in asia Over the past two weeks, we announced and launched an updated version of the DTS AutoStage broadcaster portal, the world's first global in-car radio audience measurement platform. over the past two weeks we announced and launched an updated version of the dts autostage broadcaster portal the world's first global in-car radio audience measurement platform This gives radio broadcasters insights into listening patterns, allows stations to fine-tune programming in near real time, and delivers advertisers' accurate measurement of the audience engagement across 250 designated market areas. this gives radio broadcasters insights into listening patterns allows stations to fine-tune programming in near real time and delivers advertisers' accurate measurement of the audience engagement across 250 designated market areas This level of measurement has traditionally only been available on digital streaming platforms and enables radio stations to deliver higher value to advertisers. this level of measurement has traditionally only been available on digital streaming platforms and enables radio stations to deliver higher value to advertisers The technology and scale of the platform has been years in development. We have now initiated commercial discussions around measurement and data licensing with leading broadcasters and media companies to very strong interest across the industry. Separately, as AutoStage has reached significant scale, we also initiated collaboration with leading audio media companies in the U.S. and U.K. to launch targeted advertising trials on the platform. We expect these ultimate partnerships will form the basis of additional revenue streams for advertising and data. In terms of HD radio expansion, several new radio stations went on the air with HD radio digital broadcasting. New vehicle models were launched by companies such as Audi, Hyundai, Tesla, Mercedes-Benz, and Lexus during the quarter. Notably, we also signed a significant multi-year HD radio contract with a large Asia-based tier-one supplier, which is expected to help HD radio continue to grow with Japanese car brands. The technology and scale of the platform has been years in development. the technology and scale of the platform has been years in development We have now initiated commercial discussions around measurement and data licensing with leading broadcasters and media companies to very strong interest across the industry. we have now initiated commercial discussions around measurement and data licensing with leading broadcasters and media companies to very strong interest across the industry Separately, as AutoStage has reached significant scale, we also initiated collaboration with leading audio media companies in the U.S. and U.K. to launch targeted advertising trials on the platform. separately as autostage has reached significant scale we also initiated collaboration with leading audio media companies in the u.s and u.k to launch targeted advertising trials on the platform We expect these ultimate partnerships will form the basis of additional revenue streams for advertising and data. we expect these ultimate partnerships will form the basis of additional revenue streams for advertising and data In terms of HD radio expansion, several new radio stations went on the air with HD radio digital broadcasting. in terms of hd radio expansion several new radio stations went on the air with hd radio digital broadcasting New vehicle models were launched by companies such as Audi, Hyundai, Tesla, Mercedes-Benz, and Lexus during the quarter. new vehicle models were launched by companies such as audi hyundai tesla mercedes-benz and lexus during the quarter Notably, we also signed a significant multi-year HD radio contract with a large Asia-based tier-one supplier, which is expected to help HD radio continue to grow with Japanese car brands. notably we also signed a significant multi-year hd radio contract with a large asia-based tier-one supplier which is expected to help hd radio continue to grow with japanese car brands Moving to our pay-TV business, in the third quarter, IPTV subscribers increased 32% year over year, reaching 3.2 million households. Revenue was up 18% year over year from a mix of subscriber growth in the U.S. and Latin America. We renewed the agreement with NCTC, the National Content and Technology Cooperative, covering over 70 operators in the U.S. This agreement guarantees IPTV subscriber commitments for four more years and encourages operators to launch and scale broadband TV. During the quarter, we continued to see strong interest from video over broadband operators to extend their video offerings with new, more cost-effective OTT video service bundles. As a result, by quarter-end, over 40 operators had committed to our TiVo broadband product, and over 100,000 households had activated. Moving to our pay-TV business, in the third quarter, IPTV subscribers increased 32% year over year, reaching 3.2 million households. moving to our pay-tv business in the third quarter iptv subscribers increased 32% year over year reaching 3.2 million households Revenue was up 18% year over year from a mix of subscriber growth in the U.S. and Latin America. revenue was up 18% year over year from a mix of subscriber growth in the u.s and latin america We renewed the agreement with NCTC, the National Content and Technology Cooperative, covering over 70 operators in the U.S. we renewed the agreement with nctc the national content and technology cooperative covering over 70 operators in the u.s This agreement guarantees IPTV subscriber commitments for four more years and encourages operators to launch and scale broadband TV. this agreement guarantees iptv subscriber commitments for four more years and encourages operators to launch and scale broadband tv During the quarter, we continued to see strong interest from video over broadband operators to extend their video offerings with new, more cost-effective OTT video service bundles. during the quarter we continued to see strong interest from video over broadband operators to extend their video offerings with new more cost-effective ott video service bundles As a result, by quarter-end, over 40 operators had committed to our TiVo broadband product, and over 100,000 households had activated. as a result by quarter-end over 40 operators had committed to our tivo broadband product and over 100,000 households had activated We secured a multi-year renewal with Mitchell Seaforth Cable TV, or MSC, a key partnership that impacts multiple operators in Canada and which is expected to drive our continued subscriber growth there. Lastly, at the beginning of October, we exited the DVR hardware business under the TiVo brand. Closing one innovative and industry-changing chapter in the company's history. The TiVo brand will continue to empower consumers to find, watch, and enjoy the content they love on innovative video over broadband and smart TV solutions. Let me next cover highlights in our consumer electronics business. During the quarter, we renewed a multi-year contract with Vestel to deploy DTS audio solutions across its TV brands. Vestel is the largest television manufacturer in Europe and an important customer and partner to Xperi, given their volumes across many brands. We secured a multi-year renewal with Mitchell Seaforth Cable TV, or MSC, a key partnership that impacts multiple operators in Canada and which is expected to drive our continued subscriber growth there. we secured a multi-year renewal with mitchell seaforth cable tv or msc a key partnership that impacts multiple operators in canada and which is expected to drive our continued subscriber growth there Lastly, at the beginning of October, we exited the DVR hardware business under the TiVo brand. lastly at the beginning of october we exited the dvr hardware business under the tivo brand Closing one innovative and industry-changing chapter in the company's history. closing one innovative and industry-changing chapter in the company's history The TiVo brand will continue to empower consumers to find, watch, and enjoy the content they love on innovative video over broadband and smart TV solutions. the tivo brand will continue to empower consumers to find watch and enjoy the content they love on innovative video over broadband and smart tv solutions Let me next cover highlights in our consumer electronics business. let me next cover highlights in our consumer electronics business During the quarter, we renewed a multi-year contract with Vestel to deploy DTS audio solutions across its TV brands. during the quarter we renewed a multi-year contract with vestel to deploy dts audio solutions across its tv brands Vestel is the largest television manufacturer in Europe and an important customer and partner to Xperi, given their volumes across many brands. vestel is the largest television manufacturer in europe and an important customer and partner to xperi given their volumes across many brands In our IMAX Enhanced initiative, a partnership with IMAX that brings the signature IMAX experience into the living room, we expanded our contract with Sony Pictures to release hundreds of additional titles in the IMAX Enhanced format, coupled with DTS:X immersive audio. These titles will be available for direct distribution through free ad-supporting streaming television. We believe providing free access to the IMAX Enhanced experience offers unique value for consumers and will help our program licensing partners further differentiate their IMAX Enhanced products. We also expanded the IMAX Enhanced program in the home projector category through new agreements with Optoma and Epson. To wrap up what we've discussed today, our strategic progress is evident against the growth goals we set for the year. Within media platform. We expect to finish the year above 5 million monthly active users on our TiVo One platform. In our IMAX Enhanced initiative, a partnership with IMAX that brings the signature IMAX experience into the living room, we expanded our contract with Sony Pictures to release hundreds of additional titles in the IMAX Enhanced format, coupled with DTS:X immersive audio. in our imax enhanced initiative a partnership with imax that brings the signature imax experience into the living room we expanded our contract with sony pictures to release hundreds of additional titles in the imax enhanced format coupled with dts:x immersive audio These titles will be available for direct distribution through free ad-supporting streaming television. these titles will be available for direct distribution through free ad-supporting streaming television We believe providing free access to the IMAX Enhanced experience offers unique value for consumers and will help our program licensing partners further differentiate their IMAX Enhanced products. we believe providing free access to the imax enhanced experience offers unique value for consumers and will help our program licensing partners further differentiate their imax enhanced products We also expanded the IMAX Enhanced program in the home projector category through new agreements with Optoma and Epson. we also expanded the imax enhanced program in the home projector category through new agreements with optoma and epson To wrap up what we've discussed today, our strategic progress is evident against the growth goals we set for the year. to wrap up what we've discussed today our strategic progress is evident against the growth goals we set for the year Within media platform. within media platform We expect to finish the year above 5 million monthly active users on our TiVo One platform. we expect to finish the year above 5 million monthly active users on our tivo one platform Further, we've achieved our goal of signing two additional partners to reach a total of 10 TiVo OS partners. The ARPU that we announced today of $8.75 brings us closer to our year-end goal of $10. And importantly, we've made progress in securing advertising partnerships that we expect will enable us to monetize our expanding and valuable footprint. For pay-TV, we've had considerable success in activating TiVo One through updates in North America on video over broadband devices. This effort helps us build scale in the U.S. market to further our monetization efforts. We also achieved our goal of over 3 million subscriber households in our IPTV footprint. Within connected car, we've surpassed 13 million vehicles with AutoStage and expect this large and unique footprint to continue growing as new cars enter the market. Also, we've started collaborations with leading audio media companies in the U.S. and the U.K. Further, we've achieved our goal of signing two additional partners to reach a total of 10 TiVo OS partners. further we've achieved our goal of signing two additional partners to reach a total of 10 tivo os partners The ARPU that we announced today of $8.75 brings us closer to our year-end goal of $10. the arpu that we announced today of $8.75 brings us closer to our year-end goal of $10 And importantly, we've made progress in securing advertising partnerships that we expect will enable us to monetize our expanding and valuable footprint. and importantly we've made progress in securing advertising partnerships that we expect will enable us to monetize our expanding and valuable footprint For pay-TV, we've had considerable success in activating TiVo One through updates in North America on video over broadband devices. for pay-tv we've had considerable success in activating tivo one through updates in north america on video over broadband devices This effort helps us build scale in the U.S. market to further our monetization efforts. this effort helps us build scale in the u.s market to further our monetization efforts We also achieved our goal of over 3 million subscriber households in our IPTV footprint. we also achieved our goal of over 3 million subscriber households in our iptv footprint Within connected car, we've surpassed 13 million vehicles with AutoStage and expect this large and unique footprint to continue growing as new cars enter the market. within connected car we've surpassed 13 million vehicles with autostage and expect this large and unique footprint to continue growing as new cars enter the market Also, we've started collaborations with leading audio media companies in the U.S. and the U.K. also we've started collaborations with leading audio media companies in the u.s and the u.k to launch targeted advertising trials on the AutoStage platform. In summary, we're confident this strategic progress sets us up for long-term growth, improved profitability, and increased cash flow. Let me now turn the call over to Robert to discuss our financial results. Robert? to launch targeted advertising trials on the AutoStage platform. to launch targeted advertising trials on the autostage platform In summary, we're confident this strategic progress sets us up for long-term growth, improved profitability, and increased cash flow. in summary we're confident this strategic progress sets us up for long-term growth improved profitability and increased cash flow Let me now turn the call over to Robert to discuss our financial results. let me now turn the call over to robert to discuss our financial results Robert? robert

Speaker 4: Thanks, John. I will start by reviewing the revenue results for the quarter. When excluding the impact of the perceived divestiture, overall revenue was lower by $20 million compared to last year, as expected, due to a large multi-year minimum guarantee agreement with Panasonic recorded in the prior year period. Looking at each of our primary markets, pay-TV was lower than last year by 32 million, or 39%. Due primarily to last year's Panasonic agreement. Excluding all minimum guarantee agreements from the prior year period. Pay-TV would have decreased on a percentage basis in the high single digits consistent with the overall market. Thanks, John. thanks john I will start by reviewing the revenue results for the quarter. i will start by reviewing the revenue results for the quarter When excluding the impact of the perceived divestiture, overall revenue was lower by $20 million compared to last year, as expected, due to a large multi-year minimum guarantee agreement with Panasonic recorded in the prior year period. when excluding the impact of the perceived divestiture overall revenue was lower by $20 million compared to last year as expected due to a large multi-year minimum guarantee agreement with panasonic recorded in the prior year period Looking at each of our primary markets, pay-TV was lower than last year by 32 million, or 39%. looking at each of our primary markets pay-tv was lower than last year by 32 million or 39% Due primarily to last year's Panasonic agreement. due primarily to last year's panasonic agreement Excluding all minimum guarantee agreements from the prior year period. excluding all minimum guarantee agreements from the prior year period Pay-TV would have decreased on a percentage basis in the high single digits consistent with the overall market. pay-tv would have decreased on a percentage basis in the high single digits consistent with the overall market For IPTV, revenue grew approximately $4 million, or 18%. As subscribers continued to grow at a brisk pace, particularly in Latin America. For the consumer electronics market. Excluding the impact of the perceived divestiture, revenue grew by $3 million, or 20%. Due to a higher level of new agreements this year, along with higher revenue on a per-unit basis from audio technologies in game consoles. In connected car, revenue was up by $9 million, or 36%, due to a higher level of long-term arrangements in this year's number. Including the significant Asia-based program that John mentioned earlier. Revenue in media platform was approximately flat on a year-over-year basis. Turning to the income statement, our year-over-year revenue increased by approximately $2 million, driven by higher costs related to long-term arrangements recorded in the quarter. Non-GAAP adjusted operating expense decreased by $16 million, or approximately 20%. For IPTV, revenue grew approximately $4 million, or 18%. for iptv revenue grew approximately $4 million or 18% As subscribers continued to grow at a brisk pace, particularly in Latin America. as subscribers continued to grow at a brisk pace particularly in latin america For the consumer electronics market. for the consumer electronics market Excluding the impact of the perceived divestiture, revenue grew by $3 million, or 20%. excluding the impact of the perceived divestiture revenue grew by $3 million or 20% Due to a higher level of new agreements this year, along with higher revenue on a per-unit basis from audio technologies in game consoles. due to a higher level of new agreements this year along with higher revenue on a per-unit basis from audio technologies in game consoles In connected car, revenue was up by $9 million, or 36%, due to a higher level of long-term arrangements in this year's number. in connected car revenue was up by $9 million or 36% due to a higher level of long-term arrangements in this year's number Including the significant Asia-based program that John mentioned earlier. including the significant asia-based program that john mentioned earlier Revenue in media platform was approximately flat on a year-over-year basis. revenue in media platform was approximately flat on a year-over-year basis Turning to the income statement, our year-over-year revenue increased by approximately $2 million, driven by higher costs related to long-term arrangements recorded in the quarter. turning to the income statement our year-over-year revenue increased by approximately $2 million driven by higher costs related to long-term arrangements recorded in the quarter Non-GAAP adjusted operating expense decreased by $16 million, or approximately 20%. non-gaap adjusted operating expense decreased by $16 million or approximately 20% Primarily due to reduced personnel expense as a result of our ongoing business transformation efforts, and also from last year's divestiture of perceived at the beginning of the fourth quarter. Our adjusted EBITDA was $23 million. A 21% adjusted EBITDA margin, down from last year's 31 million, as our expense decrease was more than offset by the lower revenue year-over-year. Our non-GAAP earnings per share was $0.28 cents, compared to the $0.51 cents we posted in the third quarter last year. From a balance sheet perspective, we finished the quarter with $97 million of cash and cash equivalents up $2 million from last quarter, due to the positive free cash flow of $2 million generated in the quarter. Primarily due to reduced personnel expense as a result of our ongoing business transformation efforts, and also from last year's divestiture of perceived at the beginning of the fourth quarter. primarily due to reduced personnel expense as a result of our ongoing business transformation efforts and also from last year's divestiture of perceived at the beginning of the fourth quarter Our adjusted EBITDA was $23 million. our adjusted ebitda was $23 million A 21% adjusted EBITDA margin, down from last year's 31 million, as our expense decrease was more than offset by the lower revenue year-over-year. a 21% adjusted ebitda margin down from last year's 31 million as our expense decrease was more than offset by the lower revenue year-over-year Our non-GAAP earnings per share was $0.28 cents, compared to the $0.51 cents we posted in the third quarter last year. our non-gaap earnings per share was $0.28 cents compared to the $0.51 cents we posted in the third quarter last year From a balance sheet perspective, we finished the quarter with $97 million of cash and cash equivalents up $2 million from last quarter, due to the positive free cash flow of $2 million generated in the quarter. from a balance sheet perspective we finished the quarter with $97 million of cash and cash equivalents up $2 million from last quarter due to the positive free cash flow of $2 million generated in the quarter Notably, operating cash flow was approximately $8 million in the quarter, an increase of over $12 million from the same quarter last year, due primarily to the absence this year of transaction costs related to the perceived divestiture and other restructuring costs that occurred last year. Turning now to our financial outlook, I'd like to cover two topics that are related to our outlook. First, minimum guarantee arrangements with customers, and second, the workforce reduction that we announced today. Beginning with minimum guarantee arrangements, which for simplicity, I'll refer to as MGs. We enter into MGs with our customers to lock in certainty of value, ensure usage of the technology over multiple years and product cycles, and to lower the company's service costs. As discussed on previous calls, the accounting standard for MGs creates difficult revenue comparisons on a quarterly basis. Notably, operating cash flow was approximately $8 million in the quarter, an increase of over $12 million from the same quarter last year, due primarily to the absence this year of transaction costs related to the perceived divestiture and other restructuring costs that occurred last year. notably operating cash flow was approximately $8 million in the quarter an increase of over $12 million from the same quarter last year due primarily to the absence this year of transaction costs related to the perceived divestiture and other restructuring costs that occurred last year Turning now to our financial outlook, I'd like to cover two topics that are related to our outlook. turning now to our financial outlook i'd like to cover two topics that are related to our outlook First, minimum guarantee arrangements with customers, and second, the workforce reduction that we announced today. first minimum guarantee arrangements with customers and second the workforce reduction that we announced today Beginning with minimum guarantee arrangements, which for simplicity, I'll refer to as MGs. beginning with minimum guarantee arrangements which for simplicity i'll refer to as mgs We enter into MGs with our customers to lock in certainty of value, ensure usage of the technology over multiple years and product cycles, and to lower the company's service costs. we enter into mgs with our customers to lock in certainty of value ensure usage of the technology over multiple years and product cycles and to lower the company's service costs As discussed on previous calls, the accounting standard for MGs creates difficult revenue comparisons on a quarterly basis. as discussed on previous calls the accounting standard for mgs creates difficult revenue comparisons on a quarterly basis Since revenue is required to be recognized when the agreement is signed. The amount of revenue is generally recorded as an unbilled receivable on the balance sheet, and cash is collected over the term of the agreement. Arrangements average three years in length, and cash is received when customers are billed quarterly over the duration. We have entered into MGs over many years for audio technologies within consumer electronics and have more recently seen customer interest in MGs in pay-TV and connected car, as they offer customers benefits in product planning, supply chain management, and pricing. As a percentage of revenue, MGs comprised just over 20% of total revenue in 2024. And are expected to be in the low 20% range for 2025. Importantly, these MGs are term-based arrangements that are typically renewed when the contract expires. For example, over the past two years, approximately 90%. Since revenue is required to be recognized when the agreement is signed. since revenue is required to be recognized when the agreement is signed The amount of revenue is generally recorded as an unbilled receivable on the balance sheet, and cash is collected over the term of the agreement. the amount of revenue is generally recorded as an unbilled receivable on the balance sheet and cash is collected over the term of the agreement Arrangements average three years in length, and cash is received when customers are billed quarterly over the duration. arrangements average three years in length and cash is received when customers are billed quarterly over the duration We have entered into MGs over many years for audio technologies within consumer electronics and have more recently seen customer interest in MGs in pay-TV and connected car, as they offer customers benefits in product planning, supply chain management, and pricing. we have entered into mgs over many years for audio technologies within consumer electronics and have more recently seen customer interest in mgs in pay-tv and connected car as they offer customers benefits in product planning supply chain management and pricing As a percentage of revenue, MGs comprised just over 20% of total revenue in 2024. as a percentage of revenue mgs comprised just over 20% of total revenue in 2024 And are expected to be in the low 20% range for 2025. and are expected to be in the low 20% range for 2025 Importantly, these MGs are term-based arrangements that are typically renewed when the contract expires. importantly these mgs are term-based arrangements that are typically renewed when the contract expires For example, over the past two years, approximately 90%. for example over the past two years approximately 90% Of the annualized dollar value of expiring contracts has been renewed. As such, we consider MG contracts to be ordinary course of business. And reoccurring revenue. While MGs may cause comparability issues from one quarter to the next, we believe the locking in of key customers, revenue, and predictable cash flows, all with a high probability of renewal, has significant strategic value for our business. Over the next two years, as our business continues to move toward greater monetization and advertising revenue, we expect MGs to decrease as a percentage of overall revenue. On the second topic, we announced concurrently with today's release that we are reducing our workforce by approximately 250 people across the company. This action will impact all business and functional areas and represents approximately 15% of our workforce. Of the annualized dollar value of expiring contracts has been renewed. of the annualized dollar value of expiring contracts has been renewed As such, we consider MG contracts to be ordinary course of business. as such we consider mg contracts to be ordinary course of business And reoccurring revenue. and reoccurring revenue While MGs may cause comparability issues from one quarter to the next, we believe the locking in of key customers, revenue, and predictable cash flows, all with a high probability of renewal, has significant strategic value for our business. while mgs may cause comparability issues from one quarter to the next we believe the locking in of key customers revenue and predictable cash flows all with a high probability of renewal has significant strategic value for our business Over the next two years, as our business continues to move toward greater monetization and advertising revenue, we expect MGs to decrease as a percentage of overall revenue. over the next two years as our business continues to move toward greater monetization and advertising revenue we expect mgs to decrease as a percentage of overall revenue On the second topic, we announced concurrently with today's release that we are reducing our workforce by approximately 250 people across the company. on the second topic we announced concurrently with today's release that we are reducing our workforce by approximately 250 people across the company This action will impact all business and functional areas and represents approximately 15% of our workforce. this action will impact all business and functional areas and represents approximately 15% of our workforce We view this as an important step to improve profitability and cash flow generation while enabling continued investment in our primary growth areas. We expect to incur a one-time expense of between $16 to $18 million of restructuring and related charges. Primarily for employee severance and related costs, and substantially all of which will be completed by the end of the first half of 2026. We expect that these reductions, once completed, will generate savings of $30 million-$35 million on an annualized basis. These expense reductions are intended to help offset an expected revenue mix shift as our media platform expands in 2026, which we expect will initially have higher cost of sales than other parts of our business. Turning now to our outlook for 2025, we are reiterating our annual revenue guidance range of $440 million-$460 million. And our adjusted EBITDA margin of 15% to 17%. We view this as an important step to improve profitability and cash flow generation while enabling continued investment in our primary growth areas. we view this as an important step to improve profitability and cash flow generation while enabling continued investment in our primary growth areas We expect to incur a one-time expense of between $16 to $18 million of restructuring and related charges. we expect to incur a one-time expense of between $16 to $18 million of restructuring and related charges Primarily for employee severance and related costs, and substantially all of which will be completed by the end of the first half of 2026. primarily for employee severance and related costs and substantially all of which will be completed by the end of the first half of 2026 We expect that these reductions, once completed, will generate savings of $30 million - $35 million o n an annualized basis. we expect that these reductions once completed will generate savings of $30 million - $35 million o n an annualized basis These expense reductions are intended to help offset an expected revenue mix shift as our media platform expands in 2026, which we expect will initially have higher cost of sales than other parts of our business. these expense reductions are intended to help offset an expected revenue mix shift as our media platform expands in 2026 which we expect will initially have higher cost of sales than other parts of our business Turning now to our outlook for 2025, we are reiterating our annual revenue guidance range of $440 million- $460 million. turning now to our outlook for 2025 we are reiterating our annual revenue guidance range of $440 million- $460 million And our adjusted EBITDA margin of 15% to 17%. and our adjusted ebitda margin of 15% to 17% While we expect to incur certain cash charges associated with the restructuring of our workforce, we also expect some cash savings in the quarter as employees depart. As such, we are not changing our outlook for operating cash flow, which is still expected to be neutral, plus or minus $10 million. Looking ahead, while we are not providing 2026 guidance at this point. Our preliminary view is broadly consistent with consensus estimates for next year. We plan to share a more formal outlook for 2026 when we report our fourth quarter results. That concludes our prepared remarks. Let's now open up the call for questions. Operator. While we expect to incur certain cash charges associated with the restructuring of our workforce, we also expect some cash savings in the quarter as employees depart. while we expect to incur certain cash charges associated with the restructuring of our workforce we also expect some cash savings in the quarter as employees depart As such, we are not changing our outlook for operating cash flow, which is still expected to be neutral, plus or minus $10 million. as such we are not changing our outlook for operating cash flow which is still expected to be neutral plus or minus $10 million Looking ahead, while we are not providing 2026 guidance at this point. looking ahead while we are not providing 2026 guidance at this point Our preliminary view is broadly consistent with consensus estimates for next year. our preliminary view is broadly consistent with consensus estimates for next year We plan to share a more formal outlook for 2026 when we report our fourth quarter results. we plan to share a more formal outlook for 2026 when we report our fourth quarter results That concludes our prepared remarks. that concludes our prepared remarks Let's now open up the call for questions. let's now open up the call for questions Operator. operator

Speaker 6: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press the star one again. We will pause for just a moment to assemble our Q&A. And your first question comes from the line of Matthew Galinko with Maxine Group. Please go ahead. Thank you. thank you We will now begin the question and answer session. we will now begin the question and answer session If you have dialed in and would like to ask a question, please press the star one on your telephone keypad to raise your hand and join the queue. if you have dialed in and would like to ask a question please press the star one on your telephone keypad to raise your hand and join the queue If you would like to withdraw your question, simply press the star one again. if you would like to withdraw your question simply press the star one again We will pause for just a moment to assemble our Q&A. we will pause for just a moment to assemble our q&a And your first question comes from the line of Matthew Galinko with Maxine Group. and your first question comes from the line of matthew galinko with maxine group Please go ahead. please go ahead

Speaker 1: Hi. Thanks for taking my questions. Can you maybe touch on the pieces that drive the initially lower gross margin. In the media platform business that scales and. Sort of how long do you expect to kind of operate at a lower margin before you reach kind of your terminal or a mature margin? Hi. hi Thanks for taking my questions. thanks for taking my questions Can you maybe touch on the pieces that drive the initially lower gross margin. can you maybe touch on the pieces that drive the initially lower gross margin In the media platform business that scales and. in the media platform business that scales and Sort of how long do you expect to kind of operate at a lower margin before you reach kind of your terminal or a mature margin? sort of how long do you expect to kind of operate at a lower margin before you reach kind of your terminal or a mature margin

Speaker 7: Well, I think there's a couple of things going on. There is. A. Semi-fixed cost of operating a platform as you start to. Grow that business. And so that will. Hit things harder. Initially, but as you build scale, your marginal. Advertising dollars. Will obviously come through at a higher margin. There are also various deals that we have done pretty customarily. Well, I think there's a couple of things going on. well i think there's a couple of things going on There is. there is A. a Semi-fixed cost of operating a platform as you start to. semi-fixed cost of operating a platform as you start to Grow that business. grow that business And so that will. and so that will Hit things harder. hit things harder Initially, but as you build scale, your marginal. initially but as you build scale your marginal Advertising dollars. advertising dollars Will obviously come through at a higher margin. will obviously come through at a higher margin There are also v arious deals that we have done pretty customarily. there are also v arious deals that we have done pretty customarily That help us ensure there's plenty of content on the platform and whatnot and other market, what I'll call market incentives, so that as revenue starts to emerge. Within that business, some of those costs will be recognized. So I think it's elements like that. But. We have a very strong belief that. Over time, as you certainly build significantly more revenue scale, that you will see margin acceleration in that business. That h elp us ensure there's plenty of content on the platform and whatnot and other market, what I'll call market incentives, so that as revenue starts to emerge. that h elp us ensure there's plenty of content on the platform and whatnot and other market what i'll call market incentives so that as revenue starts to emerge Within that business, some of those costs will be recognized. within that business some of those costs will be recognized So I think it's elements like that. so i think it's elements like that But. but We have a very strong belief that. we have a very strong belief that Over time, as you certainly build significantly more revenue scale, that you will see margin acceleration in that business. over time as you certainly build significantly more revenue scale that you will see margin acceleration in that business

Speaker 1: Got it. Thanks. And I guess as a follow-up, as you begin to deliver. Targeted ads to automotive. Do you expect a similar kind of individual. Fixed cost base that you need to clear before. Contributing at a higher margin level, or is that kind of all amortized through the same. Fixed cost as you do kind of on the traditional side? Got it. got it Thanks. thanks And I guess as a follow-up, as you begin to deliver. and i guess as a follow-up as you begin to deliver Targeted ads to automotive. targeted ads to automotive Do you expect a similar kind of individual. do you expect a similar kind of individual Fixed cost base that you need to clear before. fixed cost base that you need to clear before Contributing at a higher margin level, or is that kind of all amortized through the same. contributing at a higher margin level or is that kind of all amortized through the same Fixed cost as you do kind of on the traditional side? fixed cost as you do kind of on the traditional side

Speaker 7: I mean, I would say it's more of the latter. It's kind of part and parcel to. The platform we've been working on for some time. And I think the way to think about. The opportunity there is that. We are unlocking a level of. Measurement that. Currently does not exist in radio broadcast. And. The interest around being able to run. Targeting and measurement in that space is very high. It's obviously a sizable business. And has been for a long time. But what we've been able to do now is we've finished some of the. Platform development work, and we've also seen the scale get to the point where we can offer, I think, a very compelling solution to various partners, whether it be for data. Or for advertising. I mean, I would say it's more of the latter. i mean i would say it's more of the latter It's kind of part and parcel to. it's kind of part and parcel to the The platform we've been working on for some time. the platform we've been working on for some time And I think the way to think about. and i think the way to think about The opportunity there is that. the opportunity there is that We are unlocking a level of. we are unlocking a level of Measurement that. measurement that Currently does not exist in radio broadcast. currently does not exist in radio broadcast And. and The interest around being able to run. the interest around being able to run Targeting and measurement in that space is very high. targeting and measurement in that space is very high It's obviously a sizable business. it's obviously a sizable business And has been for a long time. and has been for a long time But what we've been able to do now is we've finished some of the. but what we've been able to do now is we've finished some of the Platform development work, and we've also seen the scale get to the point where we can offer, I think, a very compelling solution to various partners, whether it be for data. platform development work and we've also seen the scale get to the point where we can offer i think a very compelling solution to various partners whether it be for data Or for advertising. or for advertising I think we are, and this was part of the, I think we're turning the corner into a really interesting next chapter as we look ahead over the next 12 to 24 months. And this is something that we've been working towards for some time, part of the broader vision, but it is great to see it coming together. I think we are, and this was part of the, I think we're turning the corner into a really interesting next chapter as we look ahead over the next 12 to 24 months. i think we are and this was part of the i think we're turning the corner into a really interesting next chapter as we look ahead over the next 12 to 24 months And this is something that we've been working towards for some time, part of the broader vision, but it is great to see it coming together. and this is something that we've been working towards for some time part of the broader vision but it is great to see it coming together

Speaker 1: Great. Thank you. Great. great Thank you. thank you

Speaker 6: And the next question comes from the line of Steve Frankel with Rosenblatt. Please go ahead. And the next question comes from the line of Steve Frankel with Rosenblatt. and the next question comes from the line of steve frankel with rosenblatt Please go ahead. please go ahead

Speaker 3: Well, good afternoon, John. Congratulations on the progress in starting to scale the business. Maybe help me with a couple of numbers. For starters. I appreciate the TiVo MAU progress, but maybe tell us where that was last year in the third and fourth quarters so we can gauge it going forward. Well, good afternoon, John. well good afternoon john Congratulations on the progress in starting to scale the business. congratulations on the progress in starting to scale the business Maybe help me with a couple of numbers. maybe help me with a couple of numbers For starters. for starters I appreciate the TiVo MAU progress, but maybe tell us where that was last year in the third and fourth quarters so we can gauge it going forward. i appreciate the tivo mau progress but maybe tell us where that was last year in the third and fourth quarters so we can gauge it going forward

Speaker 7: Well, that's a good question. I don't have that exact number off the top of my head. Well, that's a good question. well that's a good question I don't have that exact number off the top of my head. i don't have that exact number off the top of my head

Speaker 4: Is your question from a geographic standpoint, Steve? Is your question from a geographic standpoint, Steve? is your question from a geographic standpoint steve

Speaker 7: Or total MAUs? Or total MAUs? or total maus

Speaker 3: Total MAUs. Total MAUs. total maus

Speaker 7: Much smaller. It has grown significantly. So. In the low millions. Very low millions. Much smaller. much smaller It has grown significantly. it has grown significantly So. so In the low millions. in the low millions Very low millions. very low millions

Speaker 3: And do you know what ARPU was last quarter? So the 875 compares to what was the most recent data point that you gave out on that. And do you know what ARPU was last quarter? and do you know what arpu was last quarter So the 875 compares to what was the most recent data point that you gave out on that. so the 875 compares to what was the most recent data point that you gave out on that

Speaker 4: It's not one we have at our fingertips here, but I think it's fair to say that it would be, I believe. Probably a pretty similar number. This happens when you do a 12-month look back when you're calculating the average revenue per user, and your. Denominator actually ends up being pretty small. So we're looking at all of our monetization revenue as a business from both TiVo One and from other parts of our business. I t's not one we have at our fingertips here, but I think it's fair to say that it would be, I believe. i t's not one we have at our fingertips here but i think it's fair to say that it would be i believe Probably a pretty similar number. probably a pretty similar number This happens when you do a 12-month look back when you're calculating the average revenue per user, and your. this happens when you do a 12-month look back when you're calculating the average revenue per user and your Denominator actually ends up being pretty small. denominator actually ends up being pretty small So we're looking at all of our monetization revenue as a business from both TiVo One and from other parts of our business. so we're looking at all of our monetization revenue as a business from both tivo one and from other parts of our business

Speaker 7: I think the expectation, Steve, is that as you start to see more monetization happening, particularly as you look into 2026 and beyond, you'll start to see that number move. Northward. Although, as we said, it won't necessarily be linear because there's. Two things going on in that calculation. The speed at which stuff is coming online in any given quarter. Relative to. Various. Monetization-related deals you may be doing in any particular given quarter. I think the expectation, Steve, is that as you start to see more monetization happening, particularly as you look into 2026 and beyond, you'll start to see that number move. i think the expectation steve is that as you start to see more monetization happening particularly as you look into 2026 and beyond you'll start to see that number move Northward. northward Although, as we said, it won't necessarily be linear because there's. although as we said it won't necessarily be linear because there's Two things going on in that calculation. two things going on in that calculation The speed at which stuff is coming online in any given quarter. the speed at which stuff is coming online in any given quarter Relative to. relative to Various. various Monetization-related deals you may be doing in any particular given quarter. monetization-related deals you may be doing in any particular given quarter

Speaker 3: Okay. Let me take a different tack then. TiVo One is scaling up nicely. What is the critical mass you need to have meaningful. Ad revenue generated on that platform? Are we halfway there, or? Okay. okay Let me take a different tack then. TiVo One is scaling up nicely. let me take a different tack then tivo one is scaling up nicely What is the critical mass you need to have meaningful. what is the critical mass you need to have meaningful Ad revenue generated on that platform? ad revenue generated on that platform Are we halfway there, or? are we halfway there or

Speaker 7: Let me kind of answer, I think, the. Bigger question, and then I'll maybe come back to another one. The answer is we expect to see. Material progress on the platform we have and based on the visibility that we have into 2026. Footprint growth. We expect that to occur in 2026. So we feel very good about that. The question of how much do you need to have, generally speaking, scale is important. To advertisers, and the scale number is kind of different based on market. So it's different for the U.K. than it is for Germany or the U.S. for that matter. But one of the things that we are doing very proactively to address the fact that in places where scale may not fully exist immediately or even in the near term where people. Let's call it some advertisers might ideally want it. That is pursuing partnerships where people can bring other footprint in conjunction with our inventory and successfully sell it. Let me kind of answer, I think, the. let me kind of answer i think the Bigger question, and then I'll maybe come back to another one. bigger question and then i'll maybe come back to another one The answer is we expect to see. the answer is we expect to see Material progress on the platform we have and based on the visibility that we have into 2026. material progress on the platform we have and based on the visibility that we have into 2026 Footprint growth. footprint growth We expect that to occur in 2026. we expect that to occur in 2026 So we feel very good about that. so we feel very good about that The question of how much do you need to have, generally speaking, scale is important. the question of how much do you need to have generally speaking scale is important To advertisers, and the scale number is kind of different based on market. to advertisers and the scale number is kind of different based on market So it's different for the U.K. than it is for Germany or the U.S. for that matter. so it's different for the u.k than it is for germany or the u.s for that matter But one of the things that we are doing very proactively to address the fact that in places where scale may not fully exist immediately or even in the near term where people. but one of the things that we are doing very proactively to address the fact that in places where scale may not fully exist immediately or even in the near term where people Let's call it some advertisers might ideally want it. let's call it some advertisers might ideally want it That is pursuing partnerships where people can bring other footprint in conjunction with our inventory and successfully sell it. that is pursuing partnerships where people can bring other footprint in conjunction with our inventory and successfully sell it And I think, as we've said, we've announced a number of partnerships that I think do two things. It helps provide some of that scale. Obviously, it helps get our inventory into various selling pipelines without having to take lots of extra time to build out those pipelines as well from an ad sales perspective. But I think more than anything, it speaks to. The fact that there is real interest in the industry in our. Inventory and footprint. And as. These partners who. Obviously deal in this space and have for some time are keen to. Engage with us to enter those partnerships and take it forward in conjunction with us. So we're not outsourcing everything we're doing on the platform. It's we're finding strategic partners in different ways and places so that we can augment and accelerate the revenue. Growth efforts. And I think, as we've said, we've announced a number of partnerships that I think do two things. and i think as we've said we've announced a number of partnerships that i think do two things It helps provide some of that scale. it helps provide some of that scale Obviously, it helps get our inventory into various selling pipelines without having to take lots of extra time to build out those pipelines as well from an ad sales perspective. obviously it helps get our inventory into various selling pipelines without having to take lots of extra time to build out those pipelines as well from an ad sales perspective But I think more than anything, it speaks to. but i think more than anything it speaks to The fact that there is real interest in the industry in our. the fact that there is real interest in the industry in our Inventory and footprint. inventory and footprint And as. and as These partners who. these partners who Obviously deal in this space and have for some time are keen to. obviously deal in this space and have for some time are keen to Engage with us to enter those partnerships and take it forward in conjunction with us. engage with us to enter those partnerships and take it forward in conjunction with us So we're not outsourcing everything we're doing on the platform. so we're not outsourcing everything we're doing on the platform It's we're finding strategic partners in different ways and places so that we can augment and accelerate the revenue. it's we're finding strategic partners in different ways and places so that we can augment and accelerate the revenue Growth efforts. growth efforts

Speaker 3: Okay. And then. Yeah. It seems very exciting that you're making progress with AutoStage and early discussions around monetizing that. Do you think that revenue becomes material. Kind of exiting 2026, or are we going to think about 2027 when that platform is a monetization machine? Okay. okay And then. and then Yeah. yeah It seems very exciting that you're making progress with AutoStage and early discussions around monetizing that. it seems very exciting that you're making progress with autostage and early discussions around monetizing that Do you think that revenue becomes material. do you think that revenue becomes material Kind of exiting 2026, or are we going to think about 2027 when that platform is a monetization machine? kind of exiting 2026 or are we going to think about 2027 when that platform is a monetization machine

Speaker 4: I think the trial, Steve, will play out through 2026, and I certainly expect to see revenue off the platform in 2026, but I think it's going to be more material in 2027. I think the trial, Steve, will play out through 2026, and I certainly expect to see revenue off the platform in 2026, but I think it's going to be more material in 2027. i think the trial steve will play out through 2026 and i certainly expect to see revenue off the platform in 2026 but i think it's going to be more material in 2027

Speaker 3: Great. Thank you so much. Great. great Thank you so much. thank you so much

Speaker 6: Thank you. And the next question comes from the line of Hamed Khorsand with BWS Financial. Please go ahead. Thank you. thank you And the next question comes from the line of Hamed Khorsand with BWS Financial. and the next question comes from the line of hamed khorsand with bws financial Please go ahead. please go ahead

Speaker 5: Hey, could you just talk a little bit more about these minimum guarantees and how it's becoming—you're saying it's going to be more than 20% of 2025 revenue. Is that because of. The competitive necessity that you have to provide such deals? Hey, could you just talk a little bit more about these minimum guarantees and how it's becoming—you're saying it's going to be more than 20% of 2025 revenue. hey could you just talk a little bit more about these minimum guarantees and how it's becoming—you're saying it's going to be more than 20% of 2025 revenue Is that because of. is that because of The competitive necessity that you have to provide such deals? the competitive necessity that you have to provide such deals

Speaker 7: I think there's multiple things going on, Hamed, and I think Robert touched on some of them in the script. You've got. Partners. In many cases, interested in trying to. Have very clear kind of windows on how they think about what technology they're including in their platforms. They obviously manage their supply chains also, in some cases, looking for. Greater certainty and not having to deal with. Potential renegotiations. And on the flip side, we are in a similar. Place. Where. We look out, and there's certainly some uncertainty in the market in these spaces. And to the extent that we can lock in our technology into various platforms for longer periods of time, it lowers our service cost, gives us greater predictability. And I think the key point about them is that. They're not. One and done. I think there's multiple things going on, Hamed, and I think Robert touched on some of them in the script. i think there's multiple things going on hamed and i think robert touched on some of them in the script You've got. you've got Partners. partners In many cases, interested in trying to. in many cases interested in trying to Have very clear kind of windows on how they think about what technology they're including in their platforms. have very clear kind of windows on how they think about what technology they're including in their platforms They obviously manage their supply chains also, in some cases, looking for. they obviously manage their supply chains also in some cases looking for Greater certainty and not having to deal with. greater certainty and not having to deal with Potential renegotiations. potential renegotiations And on the flip side, we are in a similar. and on the flip side we are in a similar Place. place Where. where We look out, and there's certainly some uncertainty in the market in these spaces. we look out and there's certainly some uncertainty in the market in these spaces And to the extent that we can lock in our technology into various platforms for longer periods of time, it lowers our service cost, gives us greater predictability. and to the extent that we can lock in our technology into various platforms for longer periods of time it lowers our service cost gives us greater predictability And I think the key point about them is that. and i think the key point about them is that They're not. they're not One and done. one and done They're just—it's kind of—it's a slightly different, more committed structure to our technology. And our solutions. The only thing that's different about it is the accounting standards require you to recognize the revenue a little bit differently than you would on a pure as-you-go. Type. Licensing reporting basis. So I think there's clear benefits on both sides. And obviously, visibility on both sides being one of the key ones. They're just—it's kind of—it's a slightly different, more committed structure to our technology. they're just—it's kind of—it's a slightly different more committed structure to our technology And our solutions. and our solutions The only thing that's different about it is the accounting standards require you to recognize the revenue a little bit differently than you would on a pure as-you-go. the only thing that's different about it is the accounting standards require you to recognize the revenue a little bit differently than you would on a pure as-you-go Type. type Licensing reporting basis. licensing reporting basis So I think there's clear benefits on both sides. so i think there's clear benefits on both sides And obviously, visibility on both sides being one of the key ones. and obviously visibility on both sides being one of the key ones

Speaker 5: Was minimum guarantee a reason why the Connecticut car revenue jumped this quarter? Was minimum guarantee a reason why the Connecticut car revenue jumped this quarter? was minimum guarantee a reason why the connecticut car revenue jumped this quarter

Speaker 4: Yes. We had a higher level of minimum guarantees. This quarter than we had last year. Yes. yes We had a higher level of minimum guarantees. we had a higher level of minimum guarantees This quarter than we had last year. this quarter than we had last year

Speaker 5: Okay. And my last question is, when would you see platform revenue stabilize? It seems like it's quite volatile quarter over quarter. Okay. okay And my last question is, when would you see platform revenue stabilize? and my last question is when would you see platform revenue stabilize It seems like it's quite volatile quarter over quarter. it seems like it's quite volatile quarter over quarter

Speaker 4: Can you define what you mean by platform? Can you define what you mean by platform? can you define what you mean by platform

Speaker 5: Well, the media platform, sorry. The media revenue, yeah. Well, the media platform, sorry. well the media platform sorry The media revenue, yeah. the media revenue yeah

Speaker 7: Yeah. I think as you start to see meaningful growth in 2026, you'll see less volatility, which has to do with some of the existing, what I'll call, underlying. Parts of that number. So it'll take on more stability. Over time as the number grows. Yeah. yeah I think as you start to see m eaningful growth in 2026, you'll see less volatility, which has to do with some of the existing, what I'll call, underlying. i think as you start to see m eaningful growth in 2026 you'll see less volatility which has to do with some of the existing what i'll call underlying Parts of that number. parts of that number So it'll take on more stability. so it'll take on more stability Over time as the number grows. over time as the number grows

Speaker 4: Okay. I think if I can add on there, given that we recognize our advertising, as we synonymously call it, monetization in media platform for the TiVo One. Growth, we expect that to be a grower next year and going forward. Okay. okay I think if I can add on there, given that we recognize our advertising, as we synonymously call it, monetization in media platform for the TiVo One. i think if i can add on there given that we recognize our advertising as we synonymously call it monetization in media platform for the tivo one Growth, we expect that to be a grower next year and going forward. growth we expect that to be a grower next year and going forward

Speaker 5: Okay. Thank you. Okay. okay Thank you. thank you

Speaker 7: You're welcome. You're welcome. you're welcome

Speaker 6: And we have no further questions at this time. I would like to turn it back to John Kirchner for closing remarks. And we have no further questions at this time. and we have no further questions at this time I would like to turn it back to John Kirchner for closing remarks. i would like to turn it back to john kirchner for closing remarks

Speaker 7: Thanks, operator. We're pleased with the meaningful progress we've made in achieving nearly all of our 2025 strategic goals ahead of schedule. I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. We look forward to sharing further updates on our year-end call. Thanks, everyone, for joining us today. Thanks, operator. thanks operator We're pleased with the meaningful progress we've made in achieving nearly all of our 2025 strategic goals ahead of schedule. we're pleased with the meaningful progress we've made in achieving nearly all of our 2025 strategic goals ahead of schedule I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. i want to thank the entire xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders We look forward to sharing further updates on our year-end call. we look forward to sharing further updates on our year-end call Thanks, everyone, for joining us today. thanks everyone for joining us today

Speaker 6: Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect. Thank you. thank you And ladies and gentlemen, this concludes today's conference call. and ladies and gentlemen this concludes today's conference call Thank you all for joining. thank you all for joining You may now disconnect. you may now disconnect