SAN JOSE, Calif.--(BUSINESS WIRE)--
Xperi Corporation (Nasdaq: XPER) (the "Company" or "we") today announced
financial results for the first quarter ended March 31, 2017.
"Our results for the quarter exceeded the high end of our revenue
guidance, driven by strength in our product licensing business and a
lower than estimated impact from purchase accounting," said Tom Lacey,
CEO of Xperi. "We made positive progress on the integration of DTS and
are on track to deliver our planned cost synergies as the Company
continues to execute well across the business. We continue to develop
roadmaps focused on the design of future integrated solutions across
audio, imaging and semiconductor packaging technologies. Importantly, we
are pleased with our progress in the Broadcom litigation and we continue
to work on the major customer relicensing negotiation."
Financial Highlights
($ in millions, except per share data)
|
|
|
|
|
|
|
|
|
Q1 2017
|
|
Q1 2016
|
|
Revenue
|
|
$67.3 |
|
$60.0 |
|
GAAP Net Income (Loss)
|
|
$(11.0) |
|
$18.1 |
|
Non-GAAP Net Income (Loss)
|
|
$(3.2) |
|
$24.6 |
|
GAAP EPS (LPS)
|
|
$(0.22) |
|
$0.36 |
|
Non-GAAP EPS (LPS)
|
|
$(0.07) |
|
$0.48 |
|
Basic/Diluted Shares Outstanding
|
|
49.1
|
|
50.6
|
|
|
|
|
|
|
|
Other Relevant Metrics
|
|
Q1 2017
|
|
Q1 2016
|
|
Purchase Accounting Impact*
|
|
$31.3 |
|
$0 |
|
Operating Cash Flow**
|
|
$19.0 |
|
$30.1 |
|
Cash, Cash Equivalents & S-T Investments***
|
|
$122.2 |
|
$363.4 |
|
Total Debt
|
|
$598.5 |
|
$0 |
|
Debt Retired
|
|
$1.5 |
|
$0 |
|
|
|
|
|
|
|
* Purchase Accounting Impact represents receipts from contracts with
customers that are not recorded as revenue due to purchase
accounting rules, but which would have been recorded as revenue if
not for the acquisition of DTS. Internally, management includes the
cash flow impact from these contracts when evaluating the Company's
operating performance, when planning, forecasting and analyzing
future periods, and when assessing the performance of its management
team.
|
|
** The year-over-year reduction in operating cash flow is primarily
attributable to the following: the positive cash flow contribution
from audio licensing offset by the absence of payments from a key
customer in the IP licensing business, interest expense from debt,
higher litigation expense, and one-time expenses associated with the
acquisition of DTS.
|
|
*** Includes $8.5 million of restricted cash in Q1 2017.
|
|
|
Dividends
On March 22, 2017, the Company paid $9.8 million to stockholders of
record as of March 1, 2017, for the quarterly cash dividend of $0.20 per
share of common stock.
Additionally, on April 26, 2017, the Board of Directors approved a
regular quarterly dividend of $0.20 per share of common stock, payable
on June 14, 2017 to stockholders of record on May 24, 2017.
Financial Guidance
|
|
|
|
|
|
|
Q2 2017
|
|
GAAP Outlook
|
|
Non-GAAP Outlook
|
|
Revenue
|
|
$88M to 92M
|
|
NA
|
|
EPS
|
|
$(0.11) to (0.08)
|
|
$0.25 to 0.32
|
|
Purchase Accounting Impact*
|
|
$7M
|
|
|
|
|
|
|
|
FY 2017
|
|
GAAP Outlook
|
|
Revenue
|
|
$370M to 445M
|
|
Operating Cash flow
|
|
$155M to 205M
|
|
Fully Diluted Shares
|
|
51M
|
|
Purchase Accounting Impact*
|
|
$51M
|
|
* Purchase Accounting Impact represents receipts from contracts
with customers that are not recorded as revenue due to purchase
accounting rules, but which would have been recorded as revenue if
not for the acquisition of DTS. Internally, management includes
the cash flow impact from these contracts when evaluating the
Company's operating performance, when planning, forecasting and
analyzing future periods, and when assessing the performance of
its management team.
|
|
|
Conference Call Information
The Company will hold its first quarter 2017, earnings conference call
at 2:00 PM Pacific time (5:00 PM Eastern time) on Wednesday, May 3,
2017. To access the call in the U.S., please dial 1-866-416-5346, and
for international callers dial 1-913-312-1446, approximately 10 minutes
prior to the start of the conference call. The conference ID is 6476150.
The conference call will also be broadcast live over the Internet at www.xperi.com
and available for replay for 90 days at www.xperi.com.
In addition, an audio replay of the call will also be available to
investors beginning at 5:00 p.m. Pacific Time, May 3, 2017 through 5:00
p.m. Pacific Time, May 10, 2017 by dialing 1-888-203-1112 or
1-719-457-0820 and entering 6476150.
Safe Harbor Statement
This press release contains forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ
significantly from those projected, particularly with respect to the
Company's financial results and guidance, achievement of planned cost
synergies, the Broadcom litigation, and relicensing of a major customer.
Material factors that may cause results to differ from the statements
made include the plans or operations relating to the businesses of the
Company; market or industry conditions; changes in patent laws,
regulation or enforcement, or other factors that might affect the
Company's ability to protect or realize the value of its intellectual
property; the expiration of license agreements and the cessation of
related royalty income; the failure, inability or refusal of licensees
to pay royalties; initiation, delays, setbacks or losses relating to the
Company's intellectual property or intellectual property litigations, or
invalidation or limitation of key patents; fluctuations in operating
results due to the timing of new license agreements and royalties, or
due to legal costs; the risk of a decline in demand for semiconductors
and products utilizing our audio and imaging technologies; failure by
the industry to use technologies covered by the Company's patents; the
expiration of the Company's patents; the Company's ability to
successfully complete and integrate acquisitions of businesses; the risk
of loss of, or decreases in production orders from, customers of
acquired businesses; financial and regulatory risks associated with the
international nature of the Company's businesses; failure of the
Company's products to achieve technological feasibility or
profitability; failure to successfully commercialize the Company's
products; changes in demand for the products of the Company's customers;
limited opportunities to license technologies due to high concentration
in applicable markets for such technologies; the impact of competing
technologies on the demand for the Company's technologies; failure to
realize the anticipated benefits of the Company's recent acquisition of
DTS, Inc., including as a result of integrating the business of DTS;
pricing trends, including the Company's ability to achieve economies of
scale; the expected amount and timing of cost savings and operating
synergies; and other developments in the markets in which the Company
operates, as well as management's response to any of the aforementioned
factors. You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this
release.
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary
statements that are included herein and elsewhere, including the Risk
Factors included in the Company's recent reports on Form 10-K and Form
10-Q and other documents of the Company on file with the Securities and
Exchange Commission (the "SEC"). The Company's SEC filings are available
publicly on the SEC's website at www.sec.gov.
Any forward-looking statements made or incorporated by reference herein
are qualified in their entirety by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects
on, the Company or its business or operations. Except to the extent
required by applicable law, the Company undertakes no obligation to
update publicly or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
About Xperi Corporation
Xperi Corporation (Nasdaq: XPER) and its wholly owned subsidiaries, DTS,
FotoNation, Invensas and Tessera, are dedicated to creating innovative
technology solutions that enable extraordinary experiences for people
around the world. Xperi's solutions are licensed by hundreds of leading
global partners and have shipped in billions of products in areas
including premium audio, broadcast, computational imaging, computer
vision, mobile computing and communications, memory, data storage, and
3D semiconductor interconnect and packaging. For more information,
please call +1 408-321-6000 or visit www.xperi.com.
Xperi, DTS, Invensas, FotoNation, Tessera and their respective logos are
trademarks or registered trademarks of affiliated companies of Xperi
Corporation in the United States and other countries. All other company,
brand and product names may be trademarks or registered trademarks of
their respective companies.
Recurring and IP Episodic Revenue
Recurring revenue is defined as revenue from a license agreement or
other agreement that is scheduled to occur over at least one year of
time. IP episodic revenue is Semiconductor and IP licensing business
revenue payable within one year pursuant to a contract. IP episodic
revenue includes non-recurring engineering fees, initial license fees,
back payments resulting from audits, damages awarded by courts or other
tribunals, and lump sum settlement payments.
Importantly, a source of IP episodic revenue may become a source of
recurring revenue, when, for example, a company settles litigation with
the Company by paying a settlement amount and entering into a license
agreement that calls for an initial license fee and ongoing royalty
payment over several years. In this scenario, the settlement amount
would be episodic revenue, as would the initial license fee, and the
ongoing royalties would be recurring revenue.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance
with U.S. Generally Accepted Accounting Principles (GAAP), the Company's
earnings release contains non-GAAP financial measures adjusted for
discontinued operations, either one-time or ongoing non-cash acquired
intangibles amortization charges, acquired in-process research and
development, all forms of stock-based compensation, impairment charges
on long-lived assets and goodwill, gain on sale of patents,
restructuring and other related exit costs, and related tax effects. The
non-GAAP financial measures also exclude the effects of FASB Accounting
Standards Codification 718, "Stock Compensation" upon the number
of diluted shares used in calculating non-GAAP earnings per share.
Management believes that the non-GAAP measures used in this release
provide investors with important perspectives into the Company's ongoing
business performance. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures
used by other companies. All financial data is presented on a GAAP basis
except where the Company indicates its presentation is on a non-GAAP
basis.
Set forth below are reconciliations of non-GAAP net income (loss) to the
Company's reported GAAP net income (loss) and non-GAAP earnings per
share to GAAP earnings per share guidance for the second quarter of 2017.
SOURCE: XPERI CORPORATION
XPER-E
|
XPERI CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(in thousands)
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2017
|
|
2016*
|
|
|
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
60,548
|
|
|
$
|
65,626
|
|
|
Short-term investments
|
|
|
53,138
|
|
|
|
47,379
|
|
|
Accounts receivable, net
|
|
|
22,995
|
|
|
|
15,863
|
|
|
Unbilled contract receivables
|
|
|
17,853
|
|
|
|
51,923
|
|
|
Other current assets
|
|
|
15,084
|
|
|
|
19,150
|
|
|
Total current assets
|
|
|
169,618
|
|
|
|
199,941
|
|
|
|
|
|
|
|
|
Restricted cash
|
|
|
8,469
|
|
|
|
-
|
|
|
Property and equipment, net
|
|
|
37,586
|
|
|
|
38,855
|
|
|
Intangible assets, net
|
|
|
513,325
|
|
|
|
541,879
|
|
|
Goodwill |
|
|
386,413
|
|
|
|
382,963
|
|
|
Other assets
|
|
|
27,892
|
|
|
|
22,798
|
|
|
Total assets
|
|
$
|
1,143,303
|
|
|
$
|
1,186,436
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
4,239
|
|
|
$
|
7,531
|
|
|
Accrued legal fees
|
|
|
9,004
|
|
|
|
7,505
|
|
|
Accrued liabilities
|
|
|
29,391
|
|
|
|
29,086
|
|
|
Current portion of long-term debt
|
|
|
6,000
|
|
|
|
6,000
|
|
|
Deferred revenue
|
|
|
2,827
|
|
|
|
895
|
|
|
Total current liabilities
|
|
|
51,461
|
|
|
|
51,017
|
|
|
|
|
|
|
|
|
Long-term deferred tax liabilities
|
|
|
803
|
|
|
|
32,565
|
|
|
Long-term debt, net
|
|
|
576,345
|
|
|
|
577,239
|
|
|
Other long-term liabilities
|
|
|
17,708
|
|
|
|
17,830
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Common stock
|
|
|
60
|
|
|
|
59
|
|
|
Additional paid-in capital
|
|
|
656,670
|
|
|
|
644,194
|
|
|
Treasury stock
|
|
|
(303,365
|
)
|
|
|
(300,114
|
)
|
|
Accumulated other comprehensive income
|
|
|
(110
|
)
|
|
|
(148
|
)
|
|
Retained earnings
|
|
|
143,731
|
|
|
|
163,794
|
|
|
Total stockholders' equity
|
|
|
496,986
|
|
|
|
507,785
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,143,303
|
|
|
$
|
1,186,436
|
|
|
|
|
* Derived from audited financial statements
|
|
|
|
XPERI CORPORATION
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
Royalty and license fees
|
|
$
|
67,255
|
|
|
$
|
59,977
|
|
|
Total revenue
|
|
|
67,255
|
|
|
|
59,977
|
|
|
Operating expenses:
|
|
|
|
|
|
Cost of revenue
|
|
|
1,400
|
|
|
|
87
|
|
|
Research, development and other related costs
|
|
|
26,012
|
|
|
|
10,069
|
|
|
Selling, general and administrative
|
|
|
41,205
|
|
|
|
11,094
|
|
|
Amortization expense
|
|
|
28,555
|
|
|
|
6,022
|
|
|
Litigation expense
|
|
|
9,978
|
|
|
|
6,550
|
|
|
Total operating expenses
|
|
|
107,150
|
|
|
|
33,822
|
|
|
Operating income (loss)
|
|
|
(39,895
|
)
|
|
|
26,155
|
|
|
Interest expense
|
|
|
(6,459
|
)
|
|
|
-
|
|
|
Other income and expense, net
|
|
|
46
|
|
|
|
807
|
|
|
Income (loss) before taxes
|
|
|
(46,308
|
)
|
|
|
26,962
|
|
|
Provision for (benefit from) income taxes
|
|
|
(35,279
|
)
|
|
|
8,872
|
|
|
Net income (loss)
|
|
$
|
(11,029
|
)
|
|
$
|
18,090
|
|
|
Basic and diluted net income (loss) per share:
|
|
|
|
Net income (loss) per share - basic
|
|
$
|
(0.22
|
)
|
|
$
|
0.36
|
|
|
Net income (loss) per share - diluted
|
|
$
|
(0.22
|
)
|
|
$
|
0.36
|
|
|
Cash dividends declared per share
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
Weighted average number of shares used in per share calculations -
basic
|
|
|
49,139
|
|
|
|
49,998
|
|
|
Weighted average number of shares used in per share calculations -
diluted
|
|
|
49,139
|
|
|
|
50,566
|
|
|
|
|
XPERI CORPORATION
|
|
RECONCILIATION TO NON-GAAP INCOME FROM GAAP NET INCOME (LOSS)
|
|
(in thousands, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
GAAP net income (loss)
|
|
$
|
(11,029
|
)
|
|
$
|
18,090
|
|
|
|
|
|
|
|
|
Adjustments to GAAP net income (loss):
|
|
|
|
Stock-based compensation expense:
|
|
|
|
|
|
Research, development and other
|
|
|
2,697
|
|
|
|
1,384
|
|
|
Selling, general and administrative
|
|
|
4,364
|
|
|
|
2,256
|
|
|
Amortization of acquired intangibles
|
|
|
28,555
|
|
|
|
6,022
|
|
|
Acquisition transaction costs
|
|
|
1,871
|
|
|
|
|
Severance from DTS acquisition
|
|
|
|
|
|
Research, development and other
|
|
|
49
|
|
|
|
-
|
|
|
Selling, general and administrative
|
|
|
481
|
|
|
|
-
|
|
|
Post acquisition retention bonus to DTS employees
|
|
|
|
|
|
Research, development and other
|
|
|
869
|
|
|
|
-
|
|
|
Selling, general and administrative
|
|
|
2,753
|
|
|
|
-
|
|
|
Tax adjustments for non-GAAP items
|
|
|
(33,808
|
)
|
|
|
(3,180
|
)
|
|
|
|
|
|
|
|
Non-GAAP net income (loss)
|
|
$
|
(3,198
|
)
|
|
$
|
24,572
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) per common share - diluted
|
|
$
|
(0.07
|
)
|
|
$
|
0.48
|
|
|
Weighted average number of shares used in per share calculations
excluding the effects of stock based compensation - diluted
|
|
|
49,139
|
|
|
|
51,590
|
|
|
|
|
XPERI CORPORATION
|
|
EPISODIC AND RECURRING REVENUE
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
|
IP Episodic
|
|
|
$
|
|
3,750
|
|
|
$
|
|
5,386
|
|
|
Recurring
|
|
|
|
|
63,505
|
|
|
|
|
54,591
|
|
|
Total revenue
|
|
|
$
|
|
67,255
|
|
|
$
|
|
59,977
|
|
|
|
|
XPERI CORPORATION
|
|
RECONCILIATION FOR GUIDANCE ON
|
|
GAAP TO NON-GAAP EARNINGS PER SHARE
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
|
|
|
Earnings per share - GAAP
|
|
|
|
$
|
|
|
(0.11
|
)
|
|
$
|
|
|
(0.08
|
)
|
|
Acquisition related costs
|
|
|
|
|
|
|
0.07
|
|
|
|
|
|
0.07
|
|
|
Stock based compensation
|
|
|
|
|
|
|
0.16
|
|
|
|
|
|
0.16
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
0.56
|
|
|
|
|
|
0.56
|
|
|
Subtotal GAAP adjustments
|
|
|
|
|
|
|
0.79
|
|
|
|
|
|
0.79
|
|
|
Income tax effect and other
|
|
|
|
|
|
|
(0.43
|
)
|
|
|
|
|
(0.39
|
)
|
|
Earnings per share - non-GAAP
|
|
|
|
$
|
|
|
0.25
|
|
|
$
|
|
|
0.32
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170503006547/en/
Investor Relations:
Xperi Corporation
Geri Weinfeld, +1
818-436-1231
geri.weinfeld@xperi.com
or
Public
Relations:
Xperi Corporation
Jordan Miller, +1 818-436-1082
jordan.miller@xperi.com
Source: Xperi Corporation
News Provided by Acquire Media