UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-41486
XPERI INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
83-4470363
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
2190 Gold Street, San Jose, California
95002
(Address of Principal Executive Offices)
(Zip Code)
(408) 519-9100
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock (par value $0.001 per share)
XPER
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of the registrant’s common stock as of April 29, 2024 was 45,148,108.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
TABLE OF CONTENTS
Page
Note About Forward-Looking Statements
3
PART I
Item 1.
Financial Statements (unaudited)
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023
4
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023
5
Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023
6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023
7
Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023
8
Notes to Condensed Consolidated Financial Statements
10
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
34
Item 4.
Controls and Procedures
PART II
Legal Proceedings
35
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
36
Signatures
37
2
This quarterly report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, growth rate, competitiveness, gross margins, levels of research, development and other related costs, expenditures, the outcome or effects of and expenses related to litigation and administrative proceedings, tax expenses, cash flows, our management’s plans and objectives for our current and future operations, the levels of customer spending or research and development activities, general economic conditions, the impact of any acquisitions or divestitures on our financial condition and results of operations, and the sufficiency of financial resources to support future operations and capital expenditures.
Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” in our Form 10-K and other documents we file from time to time with the U.S. Securities and Exchange Commission (“SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
2024
2023
Revenue
$
118,844
126,839
Operating expenses:
Cost of revenue, excluding depreciation and amortization of intangible assets
29,756
27,792
Research and development
50,439
54,856
Selling, general and administrative
56,353
57,776
Depreciation expense
3,584
4,093
Amortization expense
11,039
14,827
Impairment of long-lived assets
—
1,096
Total operating expenses
151,171
160,440
Operating loss
(32,327
)
(33,601
Interest and other income, net
1,042
1,108
Interest expense—debt
(748
(740
Gain on divestiture
22,934
Loss before taxes
(9,099
(33,233
Provision for (benefit from) income taxes
4,272
(294
Net loss
(13,371
(32,939
Less: net loss attributable to noncontrolling interest
(251
(939
Net loss attributable to the Company
(13,120
(32,000
Net loss per share attributable to the Company - basic and diluted
(0.29
(0.76
Weighted-average number of shares used in net loss per share calculations - basic and diluted
44,521
42,224
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Other comprehensive loss:
Change in foreign currency translation adjustment
(384
613
Unrealized (loss) gain on cash flow hedges
(791
863
Comprehensive loss
(14,546
(31,463
Less: comprehensive loss attributable to noncontrolling interest
Comprehensive loss attributable to the Company
(14,295
(30,524
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
March 31, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
95,216
142,085
Accounts receivable, net
63,650
55,984
Unbilled contracts receivable, net
70,363
64,114
Prepaid expenses and other current assets
42,889
38,874
Assets held for sale
15,860
Total current assets
272,118
316,917
Note receivable, noncurrent
27,676
Deferred consideration from divestiture
6,016
Unbilled contracts receivable, noncurrent
16,117
18,231
Property and equipment, net
41,712
41,569
Operating lease right-of-use assets
36,360
39,900
Intangible assets, net
195,894
206,895
Deferred tax assets
4,893
5,093
Other noncurrent assets
29,604
32,781
Assets held for sale, noncurrent
12,249
Total assets
630,390
673,635
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
19,706
20,849
Accrued liabilities
83,502
109,961
Deferred revenue
26,327
28,111
Liabilities held for sale
6,191
Total current liabilities
129,535
165,112
Long-term debt
50,000
Deferred revenue, noncurrent
22,704
19,425
Operating lease liabilities, noncurrent
26,795
30,598
Deferred tax liabilities
7,006
6,983
Other noncurrent liabilities
12,593
4,577
Liabilities held for sale, noncurrent
9,805
Total liabilities
248,633
286,500
Commitments and contingencies (Note 13)
Equity:
Preferred stock: $0.001 par value; 6,000 shares authorized as of March 31, 2024 and December 31, 2023; no shares issued and outstanding as of March 31, 2024 and December 31, 2023
Common stock: $0.001 par value; 140,000 shares authorized as of March 31, 2024 and December 31, 2023; 45,031 and 44,211 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
45
44
Additional paid-in capital
1,221,709
1,212,501
Accumulated other comprehensive loss
(4,040
(2,865
Accumulated deficit
(818,568
(805,448
Total Company stockholders’ equity
399,146
404,232
Noncontrolling interest
(17,389
(17,097
Total equity
381,757
387,135
Total liabilities and equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Gain from divestiture
(22,934
Depreciation of property and equipment
Amortization of intangible assets
Stock-based compensation expense
14,757
15,968
Deferred income taxes
223
(200
Other
313
1,000
Changes in operating assets and liabilities:
Accounts receivable
(10,521
(6,019
Unbilled contracts receivable
(4,324
(9,124
Prepaid expenses and other assets
(2,788
(5,709
(821
(1,108
Accrued and other liabilities
(26,427
(23,855
1,483
(1,133
Net cash used in operating activities
(49,787
(43,103
Cash flows from investing activities:
Purchases of property and equipment
(1,845
(1,967
Capitalized internal-use software
(2,603
(1,894
Purchases of intangible assets
(39
(68
Net cash used in divestiture
(227
Net cash used in investing activities
(4,714
(3,929
Cash flows from financing activities:
Withholding taxes related to net share settlement of equity awards
(4,671
(2,917
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(46
518
Net decrease in cash and cash equivalents
(59,218
(49,431
Cash and cash equivalents at beginning of period
154,434
(1)
160,127
Cash and cash equivalents at end of period
110,696
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds
4,235
1,603
Interest paid
756
1,496
Supplemental disclosure of noncash investing and financing activities:
Note receivable in exchange for consideration from divestiture
5,854
Unpaid withholding taxes related to net share settlement of equity awards
918
Costs capitalized for internal-use software included in accrued liabilities
676
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Three Months Ended March 31, 2024
Common Stock
AdditionalPaid-In
AccumulatedOtherComprehensive
Accumulated
Noncontrolling
Total
Shares
Amount
Capital
Loss
Deficit
Interest
Equity
Balances at January 1, 2024
44,211
Change in ownership interest of the Company
41
(41
Vesting of restricted stock units, net of tax withholding
820
1
(5,590
(5,589
Stock-based compensation
Foreign currency translation adjustment
Unrealized loss on cash flow hedges
Balances at March 31, 2024
45,031
Three Months Ended March 31, 2023
Balances at January 1, 2023
42,066
42
1,136,330
(4,119
(668,835
(14,432
448,986
(11
11
431
Unrealized gain on cash flow hedges
Balances at March 31, 2023
42,497
1,149,370
(2,643
(700,835
(15,360
430,574
9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Xperi Inc. (“Xperi” or the “Company”) is a leading consumer and entertainment technology company. The Company creates extraordinary experiences at home and on the go for millions of consumers around the world, enabling audiences to connect with content in a way that is more intelligent, immersive, and personal. Powering smart devices, connected cars, entertainment experiences and more, the Company brings together ecosystems designed to reach highly-engaged consumers, allowing it and its ecosystem partners to uncover significant new business opportunities, now and in the future. The Company’s technologies are integrated into consumer devices and a variety of media platforms worldwide, driving increased value for its partners, customers, and consumers. The Company operates in one reportable business segment and groups its business into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform.
Xperi Spin-Off
In June 2020, Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”) announced plans to separate into two independent publicly-traded companies (the “Separation”), one comprising its intellectual property (“IP”) licensing business and one comprising its product business (“Xperi Product”). On October 1, 2022 (the “Separation Date”), the Former Parent completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all the outstanding common stock of its product-related business (formerly known as Xperi Product, and hereinafter “Xperi Inc.,” “Xperi” or the Company to the stockholders of record of the Former Parent as of the close of business on September 21, 2022, the record date (the “Record Date”) for the Distribution. Each Former Parent stockholder of record received four shares of Xperi common stock, $0.001 par value, for every ten shares of the Former Parent’s common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date. As a result of the Distribution, Xperi became an independent, publicly-traded company and its common stock is listed under the symbol “XPER” on the New York Stock Exchange. In connection with the Separation and the Distribution, the Former Parent was renamed and continues as Adeia Inc. and also changed its stock symbol to “ADEA” on the Nasdaq Global Select Market.
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries, as well as an entity in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.
In the fourth quarter of 2018, the Company funded a new subsidiary, Perceive Corporation (“Perceive”), which was created to focus on delivering edge inference solutions. As of March 31, 2024, the Company owned approximately 77.5% of the outstanding equity interest of Perceive. The operating results of Perceive have been included in the Company’s condensed consolidated financial statements since the fourth quarter of 2018.
Unaudited Interim Financial Statements
The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. The amounts as of December 31, 2023 have been derived from the Company’s annual audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 1, 2024 (the “Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Form 10-K.
The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require management’s most significant, challenging, and subjective judgment include the estimation of licensees’ quarterly royalties prior to receiving the royalty reports, the determination of stand-alone selling price and the transaction price in an arrangement with multiple performance obligations, the fair value of note receivable and deferred consideration in connection with the Divestiture (as described in Note 6—Divestiture), capitalization of internal-use software, loss contingencies related to indemnification liability, the assessment of useful lives and recoverability of other intangible assets and long-lived assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and valuation of performance-based awards with a market condition. Actual results experienced by the Company may differ from management’s estimates.
Concentration of Credit and Other Risks
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with large financial institutions, and at times, the deposits may exceed the federally insured limits. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. In addition, the Company has cash and cash equivalents held in international bank accounts that are denominated in various foreign currencies, and has established risk management strategies designed to minimize the impact of certain currency exchange rate fluctuations.
The Company believes that any concentration of credit risk in its accounts receivable is substantially mitigated by its evaluation process, relatively short collection terms, and the high level of credit worthiness of its customers. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral.
There were no individually significant customers with revenue exceeding 10% of total revenue for the three months ended March 31, 2024 and 2023. As of March 31, 2024 and December 31, 2023, no single customer represented 10% or more of the Company’s net balance of accounts receivable.
Recent Accounting Pronouncements
Accounting Standards Not Yet Adopted
In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires significant segment expenses and other segment related items to be disclosed on an interim and annual basis. The new disclosure requirements are also applicable to companies with a single reportable segment. This guidance is effective on a retrospective basis for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. This guidance is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.
NOTE 2 – REVENUE
Revenue Recognition
General
Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, which may include various combinations of goods and services which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of sales taxes collected from customers which are subsequently remitted to governmental authorities.
Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative standalone selling price (“SSP”) basis. The determination of SSP considers market conditions, the size and scope of the contract, customer and geographic information, and other factors. When observable prices are not available, SSP for separate performance obligations is generally based on the cost-plus-margin approach, considering overall pricing objectives.
When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of technology or when a license of technology is the predominant item to which the variable consideration relates, revenue is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied or partially satisfied.
Description of Revenue-Generating Activities
The Company derives the majority of its revenue from licensing its technologies and solutions to customers within the Pay-TV, Consumer Electronics, Connected Car and Media Platform product categories. Refer to Part I, Item 1 of the Form 10-K for detailed information regarding these product categories.
Pay-TV
Customers within the Pay-TV category are primarily multi-channel video service providers, consumer electronics (“CE”) manufacturers, and end consumers. Revenue in this category is primarily derived from licensing the Company’s Pay-TV solutions, including Electronic Program Guides, TiVo video-over-broadband (“IPTV”) Solutions, Personalized Content Discovery and enriched Metadata.
For these solutions, the Company provides on-going media or data delivery, either via on-premise licensed software, hosting or access to its platform. The Company generally receives fees on a per-subscriber per-month basis or as a monthly fee, and revenue is recognized during the month in which the solutions are provided to the customer. For most of the on-premise licensed software arrangements, substantially all functionality is obtained through the Company’s frequent updating of the technology, data and content. In these instances, the Company typically has a single performance obligation related to these ongoing activities in the underlying arrangement, and revenue is generally recognized over the period the solution is provided. Hosted solutions and access to our platform is considered a single performance obligation recognized over the period the solution is provided.
Consumer Electronics
The Company licenses its audio technologies to CE manufacturers or their supply chain partners.
The Company generally recognizes royalty revenue from licenses based on units shipped or manufactured. Revenue is recognized in the period in which the customer’s sales or production are estimated to have occurred. This may result in an adjustment to revenue when actual sales or production are subsequently reported by the customer, generally in the month or quarter following sales or production. Estimating customers’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.
12
Certain customers enter into fixed fee or minimum guarantee agreements, whereby customers pay a fixed fee for the right to incorporate the Company’s technology in the customer’s products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the technology and begins to benefit from the license. If applicable, revenue is recognized net of the effect of any significant financing components calculated using customer-specific, risk-adjusted lending rates, with the related interest income being recognized over time on an effective rate basis. For minimum guarantee agreements where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it estimates the customer will exceed the minimum and adjusts the revenue based on actual usage once that is reported by the customer.
Connected Car
The Company licenses its digital radio solutions, automotive infotainment and related offerings to automotive manufacturers or their supply chain partners.
The Company generally recognizes royalty revenue from these licenses based on units shipped or manufactured, similar to the revenue recognition described above in “Consumer Electronics”. Certain customers may enter into fixed fee or minimum guarantee agreements, also similar to the revenue recognition described above in “Consumer Electronics”. Automotive infotainment and related revenue is generally recognized over time as the customer obtains access to the solutions and underlying data.
Media Platform
The Company generates revenue from advertising, TV viewership data, and licensing of the Vewd app framework and core middleware solutions.
Advertising revenue is generally recognized when the related advertisement is provided. TV viewership data revenue is generally recognized over time as the customer obtains the underlying data. License revenue for the Vewd solutions is generally recognized either on a per-unit royalty or a minimum guarantee or fixed fee basis, similar to as described in the “Consumer Electronics” section above.
Hardware Products, Services and Settlements/Recoveries
The Company sells hardware products, primarily to end consumers, within the Pay-TV, Media Platform, and Consumer Electronics product categories. Hardware product revenue is generally recognized when the promised product is delivered.
The Company also generates non-recurring engineering (“NRE”) revenue within all of its product categories. The Company recognizes NRE revenue as progress is made toward completion, generally using an input method based on the ratio of costs incurred to date to total estimated costs of the project.
Revenue from each of advertising, NRE services, and hardware products was less than 10% of total revenue for all periods presented.
The Company actively monitors and enforces its technology licenses, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s technologies without a license. As a result of these activities, the Company may, from time to time, recognize revenue from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, or from legal judgments in a license dispute. These settlements and recoveries may cause revenue to be higher than expected during a particular reporting period and such settlements and recoveries may not occur in subsequent periods. The Company recognizes revenue from settlements and recoveries when a binding agreement has been executed or a revised royalty report has been received and the Company concludes collection is probable.
Disaggregation of Revenue
The Company’s revenue that is recognized over time consists primarily of per unit royalties, per-subscriber per-month or monthly license fees, single performance obligations satisfied over time, and NRE services. Revenue that is recognized at a point in time consists primarily of fixed fee or minimum guarantee licensing contracts, hardware products, advertising and settlements/recoveries.
13
The following table summarizes revenue by timing of recognition (in thousands):
Recognized over time
96,682
100,213
Recognized at a point in time
22,162
26,626
Total revenue
The following table summarizes revenue by product category (in thousands):
56,806
60,294
26,128
36,735
24,348
20,548
11,562
9,262
The following table summarizes revenue by geographic location (in thousands):
U.S.
59,799
50
%
65,159
51
Japan
12,037
17,495
14
Europe and Middle East
13,475
10,166
China
12,787
11,510
Latin America
6,917
6,623
13,829
15,886
100
A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, Europe, the Middle East, and Latin America, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods.
Contract Balances
Contract Assets
A contract asset represents a right to consideration that is conditional upon factors other than the passage of time. Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where revenue recognized is in excess of the Company’s unconditional right to consideration. The amount of unbilled contracts receivable may not exceed their net realizable value and is classified as noncurrent if the payments are expected to be received more than one year from the reporting date.
Contract Liabilities
Contract liabilities are mainly comprised of deferred revenue, which arises when cash payments are received in advance of performance obligations being satisfied. Deferred revenue generally consists of prepaid licenses or other fees, amounts received related to NRE services to be performed in the future, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time.
The following table presents additional revenue disclosures (in thousands):
Revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period
7,266
6,719
Performance obligations satisfied in previous periods (true ups, recoveries, and settlements) (1)
3,009
(1,881
(1) True ups represent the differences between the Company’s quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in the following period. Recoveries represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company’s inquiries or compliance audits. Settlements represent resolutions of litigation or disputes during the period for past royalties owed.
Remaining Performance Obligations
Remaining performance obligations represent contracted revenue associated with certain non-cancelable fixed fee arrangements and engineering services contracts that have not yet been recognized. As of March 31, 2024, the Company’s remaining performance obligations and the period over which they are expected to be recognized were as follows (in thousands):
Year Ending December 31:
Amounts
2024 (remaining 9 months)
43,800
2025
31,234
2026
13,891
2027
3,899
2028
2,038
Thereafter
966
95,828
Allowance for Credit Losses
The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2024 and 2023 (in thousands):
Accounts Receivable
Unbilled Contracts Receivable
Beginning balance
1,906
190
1,950
369
Provision for credit losses
798
58
136
(19
Recoveries/charge-off
164
(3
Ending balance
2,868
245
2,067
350
NOTE 3 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
Prepaid expenses and other current assets consisted of the following (in thousands):
Prepaid expenses
25,344
19,913
Finished goods inventory
5,988
7,279
Prepaid income taxes
5,544
4,813
6,013
6,869
15
Property and equipment, net consisted of the following (in thousands):
Computer equipment and software
53,748
52,740
14,503
11,224
Office equipment and furniture
11,294
11,074
Building
17,876
Land
5,300
Leasehold improvements
13,297
11,758
Construction in progress
768
3,319
Total property and equipment
116,786
113,291
Less: accumulated depreciation and amortization(1)
(75,074
(71,722
For the three months ended March 31, 2024 and 2023, capitalization of costs associated with internal-use software was $3.3 million and $1.9 million, respectively. Amortization of capitalized internal-use software was $0.5 million for the three months ended March 31, 2024, whereas it was immaterial for the three months ended March 31, 2023.
Accrued liabilities consisted of the following (in thousands):
Employee compensation and benefits
26,556
44,095
Accrued expenses
17,927
24,307
Current portion of operating lease liabilities
14,059
14,760
Accrued other taxes
8,075
6,464
Third-party royalties
7,658
8,478
Accrued income taxes
3,012
1,991
6,215
9,866
NOTE 4 – FINANCIAL INSTRUMENTS
Non-marketable Equity Securities
As of March 31, 2024 and December 31, 2023, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $4.2 million and $4.9 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three months ended March 31, 2024 and 2023.
Derivatives Instruments
The Company uses a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing.
16
Cash Flow Hedges
The Company designates certain foreign currency forward contracts as hedging instruments pursuant to Accounting Standards Codification (“ASC”) No. 815—Derivatives and Hedging. The effective portion of the gain or loss on the derivatives are reported as a component of accumulated other comprehensive loss (“AOCL”) in stockholders’ equity and reclassified into earnings on the Condensed Consolidated Statements of Operations (Unaudited) in the period upon which the hedged transactions are settled.
The notional and fair values of all derivative financial instruments were as follows (in thousands):
Location in Balance Sheet
Derivative instruments designated as cash flow hedges:
Fair value—foreign exchange contract assets, net amount
271
1,184
Notional value held to buy U.S. dollars in exchange for other currencies
1,119
738
Notional value held to sell U.S. dollars in exchange for other currencies
49,581
45,468
All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Condensed Consolidated Balance Sheets on a net basis.
The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s Condensed Consolidated Balance Sheets were as follows (in thousands):
Gross amount of recognized assets
559
1,300
Gross amount of recognized liabilities
(288
(116
Net derivative assets
The changes in AOCL related to the cash flow hedges consisted of the following (in thousands):
1,034
(94
Other comprehensive (loss) gain before reclassification
(422
859
Amounts reclassified from accumulated other comprehensive loss into net loss
(369
Net current period other comprehensive (loss) gain
243
769
The following table summarizes the gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for three months ended March 31, 2024 and 2023 (in thousands):
349
107
456
17
Undesignated Derivatives
For derivatives that were not designated as hedge instruments, they were measured and reported at fair value as a derivative asset or liability in the Condensed Consolidated Balance Sheets with their corresponding changes in the fair value recognized as gains or losses in interest and other income, net in the Condensed Consolidated Statements of Operations. These instruments were all re-designated as foreign currency cash flow hedges in July 2023.
For the three months ended March 31, 2023, changes in fair value on the undesignated derivatives were insignificant.
NOTE 5 – FAIR VALUE
The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1
Quoted prices in active markets for identical assets.
Level 2
Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
When applying fair value principles in the valuation of assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs.
The Company’s derivative financial instruments (as described in Note 4—Financial Instruments), consisting of foreign currency forward contracts, are reported at fair value on a recurring basis and classified as Level 2.
Financial Instruments Not Recorded at Fair Value
The following table presents the fair value hierarchy for the Company’s assets and liabilities recorded at their carrying amount, but for which the fair value is disclosed (in thousands):
CarryingAmount
EstimatedFair Value
Assets:
5,847
33,692
33,523
Liabilities:
Senior unsecured promissory note
49,740
49,659
The fair value of the note receivable and the deferred consideration resulting from the Divestiture (as described in Note 6—Divestiture) were estimated based on an income and market approach with valuation inputs such as the U.S. Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments. They are classified within Level 2 of the fair value hierarchy.
The fair value of the Company’s debt (as described in Note 8—Debt) was estimated based on an income and market approach with valuation inputs such as the U.S. Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments. The Company classifies its debt within Level 2 of the fair value hierarchy.
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NOTE 6 – DIVESTITURE
In December 2023, the Company entered into a definitive agreement with Tobii AB (the “Purchaser”), an eye tracking and attention computing company, pursuant to which it agreed to sell to the Purchaser its AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”). The Divestiture represented a 100% equity sale transaction of two of the Company’s wholly-owned subsidiaries and was expected to streamline the Company’s business to further focus its business on entertainment-related products and services. All of the assets and liabilities associated with the Divestiture were classified as held for sale as of December 31, 2023.
The Divestiture was completed on January 31, 2024 (the “Closing Date”) for a total consideration of $44.3 million, comprising $10.8 million of cash, a note receivable from the Purchaser (the “Tobii Note”) of $27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $15.0 million, which was estimated to have a fair value of $5.8 million based on a present value factor on the Closing Date. The $10.8 million of cash included in the total consideration represents the cash balance that was transferred to the Purchaser on the Closing Date to support operations during the transition and was subsequently returned to the Company, and as such, this amount is included in the assets sold as of January 31, 2024 and in the total consideration received. As previously disclosed in the Form 10-K, the Purchaser was required to pay the Company the acquired closing cash balance, less certain adjustments, promptly after the Closing Date. In addition, there may be potential earnout payments (as described under Contingent Consideration below) payable in 2031, contingent upon the future success of the divested AutoSense in-cabin safety business.
In connection with the Divestiture, the Company also recorded a liability of $7.1 million for potential indemnification of certain pre-Closing matters.
As of the Closing Date, the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):
January 31, 2024
Current
Noncurrent
11,025
3,392
1,398
5,320
6,718
812
2,291
3,272
2,887
Total assets held for sale (1)
16,627
13,770
30,397
248
4,933
1,114
2,708
7,064
Total liabilities held for sale
6,295
9,772
16,067
Net assets held for sale
10,332
3,998
14,330
Upon the completion of the Divestiture, the Company recognized a gain of $22.9 million during the three months ended March 31, 2024.
The Divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.
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Note Receivable from Tobii AB
The Tobii Note, with a fixed interest rate of 8% per annum, matures on April 1, 2029 and is payable in three annual installments. The Purchaser may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, along with accrued interest, without any penalty. In the event of default, an additional interest of 2% per annum may be applied to the outstanding balance of the Tobii Note, and the Company has the right to demand full or partial payment on the outstanding balance with unpaid interest.
The Tobii Note is secured by a floating lien and security interest in certain of the Purchaser’s assets, rights, and properties, and contains customary affirmative and negative covenants including the restrictions on incurring certain indebtedness, and certain change of control and asset sale events, but does not include any financial covenants.
The Tobii Note has the following scheduled principal repayments (in thousands):
Date of Principal Payment:
April 1, 2027
10,000
April 1, 2028
April 1, 2029
7,676
Total principal payments
For the three months ended March 31, 2024, the Company recognized interest income of $0.4 million. As of March 31, 2024, accrued interest on the Tobii Note was $0.4 million.
Deferred Consideration
The deferred consideration consists of guaranteed future cash payments, which are scheduled to be made by the Purchaser in four annual payments as follows (in thousands):
Date of Payment:
February 15, 2028
3,000
February 15, 2029
2,250
February 15, 2030
4,500
February 15, 2031
5,250
Total future payments
15,000
At the Closing Date, there was $9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment. For the three months ended March 31, 2024, the Company accreted $0.2 million of the discount as interest income.
As of March 31, 2024, the net carrying amount of the deferred consideration is as follows (in thousands):
Total deferred consideration
Less: unamortized discount on deferred consideration
(8,984
Net carrying amount
Contingent Consideration
The earnout represents potential incremental cash consideration, and the payment is contingent upon the achievement of certain targeted shipments, between January 1, 2024 and December 31, 2030, of qualified automotive products featuring the AutoSense in-cabin safety technology and the related imaging solutions.
At the Closing Date, the Company elected to apply the gain contingency guidance under ASC 450—Contingencies, as it could not reasonably estimate shipment amounts. As a result, the Company deferred the recognition of the contingent consideration until it becomes probable that the Purchaser achieves the targeted shipments.
20
NOTE 7 – INTANGIBLE ASSETS, NET
Identified intangible assets consisted of the following (in thousands):
Average Life(Years)
Gross Amount
AccumulatedAmortization
Net Carrying Value
Finite-lived intangible assets:
Acquired patents
3-10
17,281
(4,031
13,250
Existing technology / content database
5-10
219,863
(184,819
35,044
Customer contracts and related relationships
3-9
493,579
(371,093
122,486
Trademarks/trade name
4-10
39,313
(35,708
3,605
Non-compete agreements
1-2
3,101
(2,992
109
Total finite-lived intangible assets
773,137
(598,643
174,494
Indefinite-lived intangible assets:
TiVo tradename/trademarks
N/A
21,400
Total intangible assets
794,537
(3,478
13,803
219,717
(181,713
38,004
493,685
(365,074
128,611
(34,453
4,860
Non-competition agreements
(2,884
217
773,097
(587,602
185,495
Total intangible assets (1)
794,497
As of March 31, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):
32,328
34,821
31,490
30,647
30,310
14,898
Total future amortization
21
NOTE 8 – DEBT
In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, the Company issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in a principal amount of $50.0 million. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, payable in cash on a quarterly basis. If a certain qualified spin-off transaction occurs, the interest rate will be increased to the greater of (a) 6.00% and (b) the sum of (i) the highest interest rate payable under any credit facility or bonds, debentures, notes or similar instruments where the issuer or any guarantor borrows money or guarantees obligations on a secured basis on or after the date of such spin-off transaction, plus (ii) 2.00%. It was determined that the Spin-Off completed on October 1, 2022 did not trigger any change in the interest rate of the debt. The Promissory Note matures on July 1, 2025. The Company may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.
The Promissory Note includes certain covenants that restrict the Company and each guarantor’s ability to, among other things, incur certain indebtedness or engage in any material line of business substantially different from those lines of business conducted by the Company on the closing date of the acquisition. The Promissory Note does not contain any financial covenants.
As of March 31, 2024, $50.0 million in principal balance was outstanding. Interest expense on the Promissory Note was $0.7 million for each of the three months ended March 31, 2024 and 2023.
NOTE 9 – NET LOSS PER SHARE
Basic net loss per share attributable to the Company is computed by dividing the net loss attributable to the Company by the number of weighted-average outstanding common shares in the period. Potentially dilutive common shares, such as common shares issuable upon exercise of stock options, vesting of restricted stock units (“RSUs”), and shares purchased under the Employee Stock Purchase Plan (“ESPP”) are typically reflected in the computation of diluted net income per share by application of the treasury stock method. Due to the net losses reported, these potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to the Company, since their effect would be anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per share attributable the Company (in thousands, except per share amounts):
Numerator:
Net loss attributable to the Company - basic and diluted
Denominator:
Weighted-average number of shares used to compute net loss per share attributable to the Company - basic and diluted
The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):
Options
69
124
Restricted stock units
8,053
7,219
ESPP
253
460
8,375
7,803
22
NOTE 10 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
Equity Incentive Plans
In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Equity Incentive Plan (the “2022 EIP”).
Under the 2022 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, RSUs, stock appreciation rights, dividend equivalents and performance awards, or any combination thereof.
The 2022 EIP provides for option grants designated as either incentive stock options or non-statutory options. Stock options have been granted with an exercise price not less than the value of the common stock on the grant date, and have 10-year contractual terms from the date of grant, and vest over a four-year period. The vesting criteria for RSUs has historically been the passage of time or meeting certain performance-based objectives, and continued employment through the vesting period over three or four years for time-based awards or three years for performance-based awards.
As of March 31, 2024, there were approximately 4.6 million shares reserved for future grants under the 2022 EIP.
Employee Stock Purchase Plans
In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Employee Stock Purchase Plan (as amended, the “2022 ESPP”). The 2022 ESPP originally provided consecutive overlapping 24-month offering periods, with four purchase periods that were generally six months in length, commencing on each December 1 and June 1 during the term of the 2022 ESPP. The 2022 ESPP was subsequently amended, and commencing December 1, 2023, the length of the offering periods was reduced from 24 months to 12 months and the employee’s maximum participant contribution was reduced from 100% to 15% of the employee’s after tax base earnings and commissions up to the limit imposed by the Internal Revenue Service. The accumulated deductions will be applied to the purchase of shares on each semi-annual purchase date. The purchase price per share will equal 85% of the fair market value per share on the start date of the offering period or, if lower, 85% of the fair market value per share on the semi-annual purchase date.
If the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of the 12-month offering period, then that offering period will automatically terminate and a new 12-month offering period will begin on the next business day. All participants in the terminated offering will be transferred to the new offering period.
As of March 31, 2024, there were 3.7 million shares reserved for future issuance under the 2022 ESPP.
Stock Options
Stock option activity for the three months ended March 31, 2024 is as follows (in thousands, except per share amounts):
Number ofSharesSubjectto Options
WeightedAverageExercisePrice PerShare
Balance at December 31, 2023
106
26.87
Options exercised
Options canceled / forfeited / expired
(37
21.39
Balance at March 31, 2024
29.87
There were no stock options granted during the three months ended March 31, 2024.
23
Restricted Stock Units
Information with respect to outstanding RSUs (including both time-based vesting and performance-based vesting) for the three months ended March 31, 2024 is as follows (in thousands, except per share amounts):
Number ofSharesSubject toTime-based Vesting
Number ofSharesSubject toPerformance-based Vesting
TotalNumber ofShares
WeightedAverageGrant DateFair ValuePer Share
5,396
1,671
7,067
15.51
Granted
2,259
670
2,929
11.41
Vested / released
(1,301
(14
(1,315
14.80
Canceled / forfeited
(436
(192
(628
19.36
5,918
2,135
13.84
Performance-Based Awards
From time to time, the Company may grant performance-based restricted stock units (“PSU”) to senior executives, certain employees, and consultants. The value and the vesting of such PSUs are generally linked to one or more performance goals or certain market conditions determined by the Company, in each case on a specified date or dates or over any period or periods determined by the Company, and may range from zero to 200% of the grant. For PSUs subject to market conditions, the fair value per award is fixed at the grant date and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of achievement of the market condition.
The Company uses the closing trading price of its common stock on the date of grant as the fair value of awards or RSUs and PSUs that are based on Company-designated performance targets. For PSUs that are based on market conditions (the “market-based PSUs”), fair value is estimated by using a Monte Carlo simulation on the date of grant.
The following assumptions were used to value the market-based PSUs granted during the period:
Expected life (years)
3.0
2.8
Risk-free interest rate
4.21
4.54
Dividend yield
0.0
Expected volatility
43.93
49.02
Stock-Based Compensation
Total stock-based compensation expense for the three months ended March 31, 2024 and 2023 is as follows (in thousands):
744
792
4,333
5,551
9,680
9,625
Total stock-based compensation expense
Stock-based compensation expense categorized by award type for the three months ended March 31, 2024 and 2023 is summarized in the table below (in thousands):
RSUs
9,185
10,755
PSUs
4,254
4,225
Employee stock purchase plan
1,318
988
24
As of March 31, 2024, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):
Unrecognized Stock-Based Compensation
Weighted-Average Period to Recognize Expense (in years)
74,406
2.2
23,268
3,387
0.9
Total unrecognized stock-based compensation expense
101,061
NOTE 11 – INCOME TAXES
For the three months ended March 31, 2024, the Company recorded an income tax expense of $4.3 million on a pretax loss of $9.1 million, which resulted in an effective tax rate of (47.0)%. The income tax expense for the three months ended March 31, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.
For the three months ended March 31, 2023, the Company recorded an income tax benefit of $0.3 million on a pretax loss of $33.2 million, which resulted in an effective tax rate of 0.9%. The income tax benefit for the three months ended March 31, 2023 was primarily related to foreign withholding taxes, partially offset by U.S. federal income taxes and state income taxes.
As of March 31, 2024, gross unrecognized tax benefits of $16.6 million decreased by $7.0 million compared to December 31, 2023. Of the total decrease, $6.9 million related to the Divestiture completed in January 2024. Of the $16.6 million gross unrecognized tax benefits, $2.6 million would affect the effective tax rate, if recognized. The Company is unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease.
It is the Company’s policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three months ended March 31, 2024 and 2023. As of March 31, 2024 and December 31, 2023, accrued interest and penalties were $0.2 million and $0.4 million, respectively.
As of March 31, 2024, the Company’s 2019 through 2024 tax years are generally open and subject to potential examination in one or more jurisdictions. In addition, in the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.
NOTE 12 – LEASES
The Company leases office and research facilities, data centers and office equipment under operating leases with various expiration dates through 2030. Certain leases offer the option to renew for up to ten years and to terminate before the expiration date. Leases with an initial term of 12 months or less are not recorded on the balance sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not included within the lease liability and right-of-use assets calculation.
The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases for previously exited office space. Certain subleases include variable payments for operating costs. The subleases are generally co-terminus with the head lease, or shorter. Subleases do not include any residual value guarantees or restrictions or covenants imposed by the leases. Income from subleases is recognized as a reduction to selling, general and administrative expenses.
25
Following the Spin-Off in October 2022, the Company decided to vacate and sublease certain of its office facilities due to a change in the manner in which the offices were being used, a significant decrease in the expected market price of the leased asset, and expected delays in subleasing the space based on the condition of the real estate leasing market. As a result, the Company was required to recognize an impairment loss after determining that the carrying amount of the leased office facilities was not recoverable and exceeded fair value. The Company estimated the fair value using a discounted cash flows approach with assumptions such as expectations of cash flows from projected sublease income, occupancy estimates, and its outlook for the local real estate market.
There were no impairment charges recorded in the three months ended March 31, 2024. For the three months ended March 31, 2023, the Company recorded impairment charges of $1.1 million to reduce the carrying amount of certain operating lease ROU assets and the related leasehold improvements.
The components of operating lease costs were as follows (in thousands):
Fixed lease cost (1)
4,286
5,158
Variable lease cost
1,053
1,487
Less: sublease income
(1,931
(2,680
Total operating lease cost
3,408
3,965
(1) Includes short-term leases expensed on a straight-line basis.
The following table presents supplemental cash flow information arising from lease transactions (in thousands):
Cash payments included in the measurement of operating lease liabilities
4,496
5,208
Operating ROU assets obtained in exchange for lease obligations
The weighted-average remaining term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:
Weighted-average remaining lease term (in years)
3.18
3.37
Weighted-average discount rate
5.3
Future minimum lease payments and related lease liabilities as of March 31, 2024 were as follows (in thousands):
Operating Lease Payments (1)
Sublease Income
Net Operating Lease Payments
11,666
(4,454
7,212
16,177
(6,107
10,070
9,812
(1,412
8,400
3,964
(368
3,596
1,996
(379
1,617
1,152
(291
861
Total lease payments
44,767
(13,011
31,756
Less: imputed interest
(3,913
Present value of operating lease liabilities
40,854
Less: operating lease liabilities, current portion
(14,059
Noncurrent operating lease liabilities
(1) Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance, and real estate taxes.
26
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Purchase and Other Contractual Obligations
In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements primarily include unconditional purchase obligations to service providers. As of March 31, 2024, the Company’s total future unconditional purchase obligations were approximately $136.9 million.
Inventory Purchase Commitment
The Company uses contract manufacturers to provide manufacturing services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate supply, the Company enters into agreements with its contract manufacturers that either allow them to procure inventory based on criteria as defined by the Company or that establish the parameters defining the Company’s requirements. A significant portion of the Company’s purchase commitments arising from these agreements consist of firm, non-cancelable and unconditional purchase commitments. In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of March 31, 2024, the Company had total purchase commitments for inventory of $0.3 million.
Indemnifications
In the normal course of business, the Company provides indemnifications of varying scopes and amounts to certain of its licensees, customers, and business partners against claims made by third parties arising from the use of the Company's products, intellectual property, services or technologies. The Company cannot reasonably estimate the possible range of losses that may be incurred pursuant to its indemnification obligations, if any. Variables affecting any such assessment include, but are not limited to: the scope of the contractual indemnification obligation; the nature of the third party claim asserted; the relative merits of the third party claim; the financial ability of the third party claimant to engage in protracted litigation; the number of parties seeking indemnification; the nature and amount of damages claimed by the party suing the indemnified party; and the willingness of such party to engage in settlement negotiations. The Company has received requests for indemnification, but to date none has been material and no liability has been recorded in the Company’s financial statements.
As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company believes, given the absence of any such payments in the Company’s history, and the estimated low probability of such payments in the future, that the estimated fair value of these indemnification agreements is not material. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable the Company to recover any payments under the indemnification agreements from its insurers, should they occur.
Contingencies
The Company and its subsidiaries have been involved in litigation matters and claims in the normal course of business. In the past, the Company or its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to determine infringement or validity of intellectual property rights, and to defend themselves or their customers against claims of infringement or breach of contract. The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings to ensure proper and full payment of royalties by licensees under the terms of their license agreements.
An adverse decision in any legal actions could result in a loss of the Company’s proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company’s licensed technology or otherwise negatively impact the Company’s stock price or its business and consolidated financial results.
27
NOTE 14 – SUBSEQUENT EVENTS
In April 2024, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of Xperi common stock. Under the repurchase program, the Company may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under this authorization. The repurchase program does not obligate the Company to repurchase any specific number of shares of common stock, has no time limit, and may be modified, suspended, or discontinued at any time without notice at the discretion of the Board.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is intended to promote understanding of our results of operations and financial condition and should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the fiscal year ended December 31, 2023 found in our Form 10-K filed by Xperi Inc. on March 1, 2024 (our “Form 10-K”).
Business Overview
We are a leading consumer and entertainment technology company. We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, enabling audiences to connect with content in a way that is more intelligent, immersive, and personal. Powering smart devices, connected cars, entertainment experiences and more, we bring together ecosystems designed to reach highly-engaged consumers, allowing us and our ecosystem partners to uncover significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and a variety of media platforms worldwide, driving increased value for our partners, customers, and consumers. We operate in one reportable business segment and group our business into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 1,850 employees and more than 35 years of operating experience.
Divestiture
In December 2023, we entered into a definitive agreement with Tobii AB, an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”). The Divestiture was completed in January 2024 and streamlined our business, further enhancing our focus on entertainment markets.
Results of Operations
The following table presents our historical operating results for the periods indicated as a percentage of revenue:
43
48
127
126
(27
(26
Interest income and other income, net
(1
(7
)%
Comparison of the Three Months Ended March 31, 2024 and 2023
We derive the majority of our revenue from licensing our technologies and solutions to customers. For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 2—Revenue of the Notes to the Condensed Consolidated Financial Statements (Unaudited).
$ Change
% Change
(dollars in thousands)
(7,995
(6
The $8.0 million, or 6%, decrease in revenue for the three months ended March 31, 2024, compared to the same period in the prior year, was primarily attributable to a decline of $10.6 million in Consumer Electronics revenue due to the Divestiture as well as a decline in minimum guarantee revenue contracts, and a decrease of $3.5 million in Pay-TV revenue, driven largely by declines in core guide products, consumer hardware, and subscription revenue which were partially offset by increases in IPTV Solutions. These decreases were partially offset by an increase of $3.8 million in Connected Car revenue as the result of growth coupled with settlements executed in HD Radio, and an increase of $2.3 million in Media Platform revenue driven principally by growth in our smart TV application software and middleware platform in the first quarter of 2024.
Operating Expenses
1,964
(4,417
(8
(1,423
(2
(509
(12
(3,788
(1,096
(100
(9,269
Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets
Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings and non-recurring engineering (“NRE”) services.
Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended March 31, 2024 was $29.8 million, as compared to $27.8 million in the same period of the prior year, an increase of $2.0 million, or 7%. The increase was primarily due to higher delivery costs related to an increase in NRE revenue in the first quarter of 2024.
Research and Development
Research and development expenses consist primarily of employee-related costs, stock-based compensation expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs. Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.
Research and development expense for the three months ended March 31, 2024 was $50.4 million, as compared to $54.9 million in the same period of the prior year, a decrease of $4.5 million, or 8%. The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the Divestiture, a reduction in expenses in the Perceive subsidiary, and an increase in capitalized costs for internal-use software in the first quarter of 2024.
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Selling, General and Administrative
Selling expenses consist primarily of compensation and related costs (including stock-based compensation expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade show expenses. General and administrative expenses consist primarily of compensation and related costs (including stock-based compensation expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services. Our general and administrative expenses, other than facilities-related expenses and fringe benefits, are not allocated to other expense line items.
Selling, general and administrative expenses for the three months ended March 31, 2024 were $56.4 million, as compared to $57.8 million in the same period of the prior year, a decrease of $1.4 million, or 2%. The decrease was primarily attributable to the reduced employee headcount following the Divestiture as well as savings in contractor expenses, partially offset by an increase in one-time transaction costs related to the Divestiture in the first quarter of 2024.
Stock-based Compensation
The following table sets forth our stock-based compensation expense for the three months ended March 31, 2024 and 2023 (in thousands):
We recognized stock-based compensation expense from restricted stock units and purchases made under our employee stock purchase plan. The $1.2 million, or 8%, decrease in stock-based compensation expense for the three months ended March 31, 2024, when compared to the same period of the prior year, was primarily driven by reduced employee headcount as a result of the Divestiture, and secondarily a decrease in equity awards granted in the first quarter of 2024.
Depreciation Expense
We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense for the three months ended March 31, 2024 was $3.6 million, as compared to $4.1 million in the same period of the prior year, a decrease of $0.5 million, or 12%. The decrease was primarily due to certain fixed assets being fully depreciated during 2023.
Amortization Expense
We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense for the three months ended March 31, 2024 was $11.0 million, as compared to $14.8 million in the same period of the prior year, a decrease of $3.8 million, or 26%. The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.
As a result of intangible assets we acquired in previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years. See Note 7—Intangible Assets, Net of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional detail.
Impairment of Long-Lived Assets
As a result of optimizing our global real estate footprint and subleasing certain offices following the Spin-Off (as defined in Note 1—Description Of Business And Summary Of Significant Accounting Policies), we recorded non-cash impairment charges of $1.1 million to reduce the carrying amount of certain operating lease ROU assets and property and equipment, including leasehold improvements, during the three months ended March 31, 2023. We determined that we may not be able to fully recover the carrying amount of the leased offices due to how the offices are being used, a significant decrease in the expected market price of the leased asset, and expected delays in subleasing the space based on the current real estate leasing market.
We did not record any asset impairment charge for the three months ended March 31, 2024.
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Gain on Divestiture
As previously disclosed, we completed the Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets. Upon the completion of the Divestiture, we recognized a gain of $22.9 million during the three months ended March 31, 2024. Refer to Note 6—Divestiture of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.
Provision for (Benefit from) Income Taxes
For the three months ended March 31, 2024, we recorded an income tax expense of $4.3 million on a pretax loss of $9.1 million, which resulted in an effective tax rate of (47.0)%. The income tax expense for the three months ended March 31, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.
For the three months ended March 31, 2023, we recorded an income tax benefit of $0.3 million on a pretax loss of $33.2 million, which resulted in an effective tax rate of 0.9%. The income tax benefit for the three months ended March 31, 2023 was primarily related to foreign withholding taxes, partially offset by U.S. federal income taxes and state income taxes.
The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that it was unlikely that we would realize our federal, certain state and certain foreign deferred tax assets given the substantial amount of tax attributes that will remain unutilized to offset reversing deferred tax liabilities. We intend to continue maintaining a full valuation allowance on our federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release depends on the level of profitability that we are able to achieve.
Liquidity and Capital Resources
The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the periods presented:
As of
(in thousands, except for ratios)
Current ratio
2.1
1.9
Our primary liquidity and capital resources are our cash and cash equivalents on hand. Cash and cash equivalents were $95.2 million at March 31, 2024, a decrease of $59.2 million from $154.4 million, including $12.3 million classified as held for sale in connection with the Divestiture, as of December 31, 2023. This decrease resulted primarily from cash used in operations of $49.8 million, $4.7 million in payments of withholding taxes on net share settlement of equity awards and $4.7 million of capital expenditures and capitalized internal-use software costs.
For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Form 10-K. Our cash requirements have not changed materially since December 31, 2023.
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Stock Repurchase Program
In April 2024, our Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of our common stock (the “Program”). Under the Program, we may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program. Since the inception of the Program, we have not repurchased any shares of our common stock. The volume, timing, and manner of any repurchases will be determined at our discretion, subject to general market conditions, as well as our management of capital, general business conditions, other investment opportunities, regulatory requirements, and other factors. We currently expect to fund the repurchase program from cash and cash equivalents, short-term investments and/or future cash flows. The repurchase program does not obligate us to repurchase any specific number of shares of common stock, has no time limit, and may be modified, suspended, or discontinued at any time without notice at the discretion of the Board. Any repurchases under the Program may not enhance the value of our common stock.
Cash Flows from Operating Activities
Net cash used in operating activities was $49.8 million for the three months ended March 31, 2024, primarily due to our net loss of $13.4 million being further adjusted by $43.4 million of changes in operating assets and liabilities including payment during the quarter of employee annual bonuses for 2023 performance, and $22.9 million of a non-cash gain recognized from the Divestiture, partially offset by non-cash items such as stock-based compensation expense of $14.8 million, amortization of intangible assets of $11.0 million, and depreciation expense of $3.6 million.
Net cash used in operating activities was $43.1 million for the three months ended March 31, 2023, primarily due to our net loss of $32.9 million and $46.9 million in changes in operating assets and liabilities, partially offset by non-cash items of stock-based compensation expense of $16.0 million, amortization of intangible assets of $14.8 million, depreciation expense of $4.1 million, and an asset impairment charge of $1.1 million.
Cash Flows from Investing Activities
Net cash used in investing activities was $4.7 million and $3.9 million for three months ended March 31, 2024 and 2023, respectively, which was primarily related to capital expenditures and capitalized internal-use software.
Capital Expenditures
Our capital expenditures for property and equipment consist primarily of purchases of computer hardware and software, capitalized internal-use software, information systems, and production and test equipment. We expect capital expenditures in 2024 to be approximately $20.0 million. These expenditures are expected to be paid with existing cash and cash equivalents. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.
Cash Flows from Financing Activities
Net cash used in financing activities was $4.7 million and $2.9 million for the three months ended March 31, 2024 and 2023, respectively, which reflected the payment of withholding taxes related to net share settlement of equity awards.
Long-Term Debt
In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, of which $50.0 million was outstanding at March 31, 2024. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to potential adjustments as described in Note 8—Debt to the Condensed Consolidated Financial Statements included in this Quarterly Report. The Promissory Note matures on July 1, 2025. We may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.
33
Short-Term Liquidity/Financings
Our current cash and cash equivalents balance is expected to be sufficient to support our operations, capital expenditures and income tax payments, in addition to any investments and other capital allocation needs, for at least the next 12 months from the issuance date of these financial statements, and for the foreseeable future thereafter. As our debt becomes due, we may be required to access the capital markets for additional funding. As we assess inorganic growth strategies, we may need to supplement our cash and cash equivalents with outside sources. As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow as well as our ability to access the market in light of those earning levels.
Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. Equity or debt financing may not be available when needed or, if available, equity financing may not be on terms satisfactory to us.
We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives. Our access to capital markets may be constrained and our cost of borrowing may increase under certain business and market conditions, and our liquidity is subject to various risks including the risks identified in “Risk Factors” included in Item 1A of our Form 10-K.
Critical Accounting Estimates
During the three months ended March 31, 2024, there were no significant changes in our critical accounting estimates. For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.
See Note 1—Description of Business and Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements (Unaudited) included in this Quarterly Report for more information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
For a discussion of our market risk, see Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K.
Item 4. Controls and Procedures
Evaluation of Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.
Change in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the last fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the normal course of our business, we are involved in legal proceedings. In the past, we have litigated to enforce the terms of license agreements, determine infringement or validity of intellectual property rights, and defend ourselves or our customers against claims of infringement or breach of contract. We expect to continue to be involved in similar legal proceedings in the future. Although considerable uncertainty exists, our management does not anticipate that the ultimate disposition of these matters will have a material adverse effect on our results of operations, consolidated financial position or liquidity. However, the ultimate disposition, costs, or liabilities could be material to our results of operations in the period recognized.
Item 1A. Risk Factors
Except as set forth below, there were no material changes to the risk factors previously disclosed in Part 1, Item 1A. of our Form 10-K, which is incorporated by reference herein.
Our stock repurchase program may not be fully consummated, may not enhance long-term stockholder value, may increase the volatility of our stock prices and, as we implement it, will diminish our cash reserves.
Pursuant to the Program adopted in April 2024, we may repurchase of up to $100.0 million of our common stock, from time to time, through open market purchases, block trades, in privately negotiated transactions, accelerated share repurchase transactions, or by other means. Since the inception of the Program, we have not repurchased any shares of our common stock. The volume, timing, and manner of any repurchases will be determined at our discretion, subject to general market conditions, as well as our management of capital, general business conditions, other investment opportunities, regulatory requirements, and other factors. The Program does not have an expiration date and does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares, or to do so in any particular manner. Further, repurchases under the Program could affect our share trading prices or increase their volatility, and any repurchases will reduce our cash reserves. We are under no legal obligation to repurchase any shares, and if we do not do so or if we commence repurchases and then suspend or terminate them, the trading prices of our stock may decrease and their volatility increase. We may not in the future have cash and cash equivalents sufficient to fund all potential repurchases under the Program. Even if we complete the Program, we may not be successful in our goal of enhancing stockholder value. As we use our cash resources in the Program, we have less cash to fund our operations and pursue other opportunities that may provide value to stockholders.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibit
Number
Exhibit Title
3.1
Amended and Restated Certificate of Incorporation of Xperi Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022).
3.2
Amended and Restated Bylaws of Xperi Inc., adopted as of October 1, 2022 (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022).
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 9, 2024
By:
/s/ Robert Andersen
Robert Andersen
Chief Financial Officer