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Xperi Holding Corporation Announces Third Quarter 2021 Results

November 08, 2021

Xperi Holding Corporation (Nasdaq: XPER) (the “Company”, “Xperi” or “we”) today announced financial results for the third quarter ended September 30, 2021.

“We finished the third quarter with better-than-expected revenue, cash flow, and earnings, and we remain on track to deliver strong financial results for the year, despite seeing an increased impact from general supply chain constraints,” said Jon Kirchner, chief executive officer of Xperi. “Importantly, we’ve made significant progress driving growth in our IP business, as well as advancing DTS AutoStage and DTS AutoSense deployments, increasing IPTV adoption, and expanding the TiVo Stream platform.”

Third Quarter 2021 Financial Highlights:

  • Revenue of $219.4 million, up 8.2% year-over-year.
  • GAAP loss per share of $(0.43) and non-GAAP earnings per share of $0.53.
  • Cash Flow from Operations of $82.9 million.
  • Adjusted Free Cash Flow1 of $87.7 million.
  • Repurchased $24.8 million of common stock.

Third Quarter 2021 Business and Recent Operating Highlights:

IP Licensing Business (Revenue: $101.6 million)

  • Continued to demonstrate the long-term stability and significant profitability of the media IP business.
  • Signed a license with Yangtze Memory Technologies Co., Ltd. (YMTC), the first company to ship commercial 3D NAND product that incorporates hybrid bonding.

Product Business (Revenue: $117.7 million)

Consumer Experience business highlights:

  • Revenue of $46.1 million.
  • Announced that The Walt Disney Company, IMAX, and DTS will launch IMAX Enhanced on Disney+ on November 12, 2021, beginning with the Marvel Cinematic Universe.
  • Expanded ad-supported TiVo+ with new content partners including QVC, Hallmark Movies & More, Magnolia Pictures and Kevin Hart’s Laugh Out Loud; expanded Pluto TV offering with 33 new channels; and added AcornTV to the TiVo Stream 4K.
  • Successfully launched new Connected TV advertising product with unique audience targeting based on TiVo’s viewership data.

Pay-TV business highlights:

  • Revenue of $54.2 million.
  • Saw accelerated IPTV deployments and supported Cable One, Service Electric Cablevision, Blue Ridge, and Armstrong in launching IPTV services.

Connected Car business highlights:

  • Revenue of $17.4 million.
  • Delivered HD Radio on 24 new 2021 car models in the U.S. and Mexico.
  • Mercedes launched the Mercedes C-Class with DTS AutoStage in Europe, following the successful launch of the S-Class.
  • BMW launched BMW iX vehicles with DTS AutoSense in Europe.

Capital Allocation

During the quarter, the Company repurchased $24.8 million of common stock.

On September 14, 2021, the Company paid $5.2 million to stockholders of record on August 24, 2021, for a quarterly cash dividend of $0.05 per share of common stock.

On October 29, 2021, the Board of Directors declared a dividend of $0.05 per share, payable on December 20, 2021, to stockholders of record on November 29, 2021.

Full Year 2021 Business Outlook

The Company made adjustments to its full year outlook, narrowing the revenue range, lowering the expense range, and raising the operating cash flow range.

Category

New GAAP Outlook

Prior GAAP Outlook

Revenue

$870M to $890M

$860M to $900M

COGS

$115M to $125M

$115M to $125M

Operating Expense excluding COGS*

$735M to $745M

$760M to $790M

Interest Expense

~ $39M

~ $39M

Other Income

~ $4M

~ $4M

Cash Tax (net of refunds)

~$36M

$35M to $38M

Basic Shares Outstanding

105M

105M

Diluted Shares Outstanding

107M

107M

Operating Cash Flow

$205M to $225M

$180M to $220M

 
Category

New Non-GAAP Outlook

Prior Non-GAAP Outlook

Revenue

$870M to $890M

$860M to $900M

COGS

$115M to $125M

$115M to $125M

Operating Expense excluding COGS*

$455M to $465M

$475M to $505M

Interest Expense

~ $39M

~ $39M

Other Income

~ $4M

~ $4M

Cash Tax (net of refunds)

~$36M

$35M to $38M

Basic Shares Outstanding

105M

105M

Diluted Shares Outstanding

112M

112M

Operating Cash Flow

$205M to $225M

$180M to $220M

Adjusted Free Cash Flow1*

$210M to $230M

$185M to $225M

1 Adjusted Free Cash Flow is defined as Operating Cash Flow, less purchases of property and equipment, plus merger and integration, separation, and severance and retention costs.

*See tables for reconciliation of GAAP to non-GAAP differences.

Conference Call Information

The Company will hold its third quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Monday, November 8, 2021. To access the call in the U.S., please dial 800-367-2403, and for international callers, dial +1 334-777-6978. The conference ID is 5799999. All participants should dial in 15 minutes prior to the start of the conference call and can use the conference ID to access the call. The Company also suggests utilizing the webcast link to access the call at Q3 Earnings Call Webcast.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company’s current expectations, estimates and projections about the Company’s financial results, forecasts, and business outlook, and growth drivers in the Company’s business segments. In this context, forward-looking statements often address expected future business, financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,” “continue,” “expect,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results, such as statements about the anticipated benefits of the transaction. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenue, cost savings, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business strategies, and expansion and growth of the Company’s businesses; the Company’s ability to implement its business strategy; pricing trends, including the Company’s ability to achieve economies of scale; the ability of the Company to retain and hire key personnel; uncertainty as to the long-term value of the Company’s common stock; legislative, regulatory and economic developments affecting the Company’s business; general economic and market developments and conditions; failure to remediate the material weaknesses in our internal control over financial reporting; the evolving legal, regulatory and tax regimes under which the Company operates; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, and natural disasters; the extent to which the COVID-19 pandemic continues to have an adverse impact on our business, results of operations, and financial condition will depend on future developments, including measures taken in response to the pandemic, which are highly uncertain and cannot be predicted; the impact of semiconductor supply chain constraints on our customers; and any plans regarding a potential separation of the combined business. These risks, as well as other risks associated with the business, are more fully discussed in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K. While the list of factors presented here is, and the list of factors presented in the Company’s filings with the SEC are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company’s consolidated financial condition, results of operations, liquidity or trading price of common stock. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

About Xperi Holding Corporation

Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands (DTS, HD Radio, IMAX Enhanced, Invensas, TiVo), and by its startup, Perceive, make entertainment more entertaining, and smart devices smarter. Xperi technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for partners, customers and consumers.

Xperi, DTS, IMAX Enhanced, Invensas, HD Radio, Perceive, TiVo and their respective logos are trademarks or registered trademarks of affiliated companies of Xperi Holding 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.

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 either one-time or ongoing non-cash acquired intangibles amortization charges; costs related to actual or planned business combinations including transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; all forms of stock-based compensation; loss on debt extinguishment; expensed debt refinancing costs and related tax effects. Management believes that the non-GAAP measures used in this release provide investors with important perspectives into the Company’s ongoing business and financial performance, and provide a better understanding of our core operating results reflecting our normal business operations. 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. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP Operating Expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures. 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 the Company’s reported and forecasted GAAP to non-GAAP financial metrics.

– Tables Follow –

SOURCE: XPERI HOLDING CORP
XPER-E

 
XPERI HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30,
2021
September 30,
2020
September 30,
2021
September 30,
2020
Revenue:
Licensing, services and software

$

214,558

 

$

195,319

 

$

651,075

 

$

448,802

 

Hardware

 

4,821

 

 

7,478

 

 

12,172

 

 

9,291

 

Total revenue

 

219,379

 

 

202,797

 

 

663,247

 

 

458,093

 

Operating expenses:
Cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets

 

26,043

 

 

21,854

 

 

69,875

 

 

31,646

 

Cost of hardware revenue, excluding depreciation and amortization of intangible assets

 

6,506

 

 

12,216

 

 

17,689

 

 

13,688

 

Research, development and other related costs

 

58,766

 

 

57,731

 

 

168,369

 

 

124,565

 

Selling, general and administrative

 

62,627

 

 

63,785

 

 

197,754

 

 

168,586

 

Depreciation expense

 

6,796

 

 

6,753

 

 

17,994

 

 

11,815

 

Amortization expense

 

52,388

 

 

50,894

 

 

156,825

 

 

105,447

 

Litigation expense

 

2,327

 

 

8,527

 

 

7,162

 

 

14,501

 

Total operating expenses

 

215,453

 

 

221,760

 

 

635,668

 

 

470,248

 

Operating income (loss)

 

3,926

 

 

(18,963

)

 

27,579

 

 

(12,155

)

Interest expense

 

(8,532

)

 

(13,393

)

 

(30,400

)

 

(24,602

)

Other income and expense, net

 

927

 

 

2,305

 

 

2,916

 

 

3,448

 

Loss on debt extinguishment

 

 

 

 

 

(8,012

)

 

(8,300

)

Loss before taxes

 

(3,679

)

 

(30,051

)

 

(7,917

)

 

(41,609

)

Provision for (benefit from) income taxes

 

42,698

 

 

482

 

 

35,807

 

 

(6,761

)

Net loss

$

(46,377

)

$

(30,533

)

$

(43,724

)

$

(34,848

)

Less: net loss attributable to noncontrolling interest

 

(1,310

)

 

(781

)

 

(2,826

)

 

(1,819

)

Net loss attributable to the Company

$

(45,067

)

$

(29,752

)

$

(40,898

)

$

(33,029

)

Loss per share attributable to the Company:
Basic

$

(0.43

)

$

(0.28

)

$

(0.39

)

$

(0.44

)

Diluted

$

(0.43

)

$

(0.28

)

$

(0.39

)

$

(0.44

)

 
Weighted average number of shares used in per share calculations-basic

 

104,849

 

 

107,499

 

 

104,898

 

 

75,441

 

Weighted average number of shares used in per share calculations-diluted

 

104,849

 

 

107,499

 

 

104,898

 

 

75,441

 

 

XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 

September 30,

 

December 31,

 

2021

 

 

 

2020

 

ASSETS
Current assets:
Cash and cash equivalents

$

165,438

 

$

170,188

 

Available-for-sale debt securities

 

71,863

 

 

86,947

 

Accounts receivable, net

 

130,291

 

 

115,975

 

Unbilled contracts receivable, net

 

103,277

 

 

132,431

 

Other current assets

 

47,838

 

 

40,763

 

Total current assets

 

518,707

 

 

546,304

 

Long-term unbilled contracts receivable

 

4,653

 

 

6,761

 

Property and equipment, net

 

61,265

 

 

63,207

 

Operating lease right-of-use assets

 

70,858

 

 

80,226

 

Intangible assets, net

 

864,485

 

 

1,004,379

 

Goodwill

 

851,088

 

 

847,029

 

Other long-term assets

 

153,486

 

 

153,270

 

Total assets

$

2,524,542

 

$

2,701,176

 

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

16,081

 

$

13,045

 

Accrued legal fees

 

3,582

 

 

5,783

 

Accrued liabilities

 

108,934

 

 

129,035

 

Current portion of long-term debt, net

 

36,037

 

 

43,689

 

Deferred revenue

 

43,989

 

 

33,119

 

Total current liabilities

 

208,623

 

 

224,671

 

Deferred revenue, less current portion

 

28,601

 

 

39,775

 

Long-term deferred tax liabilities

 

19,181

 

 

24,754

 

Long-term debt, net

 

738,438

 

 

795,661

 

Noncurrent operating lease liabilities

 

57,124

 

 

66,243

 

Other long-term liabilities

 

101,421

 

 

98,953

 

Total liabilities

 

1,153,388

 

 

1,250,057

 

Commitments and contingencies
Company stockholders’ equity:
Preferred stock

 

 

 

 

Common stock

 

113

 

 

110

 

Additional paid-in capital

 

1,324,763

 

 

1,268,471

 

Treasury stock at cost

 

(152,453

)

 

(77,218

)

Accumulated other comprehensive income (loss)

 

(297

)

 

1,264

 

Retained earnings

 

207,600

 

 

264,250

 

Total Company stockholders’ equity

 

1,379,726

 

 

1,456,877

 

Noncontrolling interest

 

(8,572

)

 

(5,758

)

Total equity

 

1,371,154

 

 

1,451,119

 

Total liabilities and equity

$

2,524,542

 

$

2,701,176

 

 

XPERI HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Nine Months Ended

September 30,
2021

September 30,
2020

Cash flows from operating activities:
Net loss

$

(43,724

)

$

(34,848

)

Adjustments to reconcile net loss to net cash from operating activities:
Depreciation of property and equipment

 

17,994

 

 

11,815

 

Amortization of intangible assets

 

156,825

 

 

105,447

 

Stock-based compensation expense

 

42,468

 

 

26,614

 

Deferred income taxes

 

(7,092

)

 

(28,158

)

Loss on debt extinguishment

 

8,012

 

 

8,300

 

Patent assets received in lieu of cash

 

(8,787

)

 

 

Other

 

8,474

 

 

8,635

 

Changes in operating assets and liabilities:
Accounts receivable

 

(14,327

)

 

14,982

 

Unbilled contracts receivable

 

30,708

 

 

37,874

 

Other assets

 

(3,956

)

 

(21,793

)

Accounts payable

 

3,036

 

 

921

 

Accrued and other liabilities

 

(23,414

)

 

(6,471

)

Deferred revenue

 

(304

)

 

6,115

 

Net cash from operating activities

 

165,913

 

 

129,433

 

Cash flows from investing activities:
Purchases of property and equipment

 

(8,298

)

 

(2,975

)

Proceeds from sale of property and equipment

 

19

 

 

 

Net cash received (paid) for mergers and acquisitions

 

(17,400

)

 

117,424

 

Purchases of intangible assets

 

(119

)

 

(692

)

Purchases of short-term investments

 

(65,446

)

 

(68,093

)

Proceeds from sales of investments

 

46,248

 

 

7,189

 

Proceeds from maturities of investments

 

33,436

 

 

19,683

 

Net cash from investing activities

 

(11,560

)

 

72,536

 

Cash flows from financing activities:
Dividends paid

 

(15,752

)

 

(25,579

)

Repayment of debt

 

(73,923

)

 

(357,125

)

Debt refinancing costs

 

(6,843

)

 

 

Proceeds from debt, net of debt discount and issuance costs

 

 

 

1,010,286

 

Repayment of assumed debt from merger transaction

 

 

 

(734,609

)

Proceeds from employee stock purchase program and exercise of stock options

 

13,839

 

 

4,765

 

Repurchases of common stock

 

(75,235

)

 

(59,291

)

Net cash from financing activities

 

(157,914

)

 

(161,553

)

Effect of exchange rate changes on cash and cash equivalents

 

(1,189

)

 

758

 

Net increase (decrease) in cash and cash equivalents

 

(4,750

)

 

41,174

 

Cash and cash equivalents at beginning of period

 

170,188

 

 

74,551

 

Cash and cash equivalents at end of period

$

165,438

 

$

115,725

 

Supplemental disclosure of cash flow information:
Interest paid

$

25,030

 

$

20,372

 

Income taxes paid, net of refunds

$

22,151

 

$

30,647

 

Stock issued in merger transaction

$

 

$

828,334

 

 

XPERI HOLDING CORPORATION

GAAP TO NON-GAAP RECONCILIATIONS
(in thousands, except per share amounts)
(unaudited)
 
Net income attributable to the Company:
Three Months Ended
September 30, 2021
 
GAAP net loss attributable to the Company

$

(45,067

)

 
Adjustments to GAAP net loss attributable to the Company:
Stock-based compensation expense:
Cost of revenue

 

525

 

Research, development and other

 

5,110

 

Selling, general and administrative

 

8,779

 

Amortization expense

 

52,388

 

Merger and integration-related costs:
Transaction and other related costs recorded in selling, general and administrative

 

130

 

Severance and retention recorded in cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets

 

100

 

Severance and retention recorded in research, development and other

 

129

 

Severance and retention recorded in selling, general and administrative

 

115

 

Separation costs recorded in selling, general and administrative

 

2,241

 

Tax provision recorded in excess of cash taxes paid

 

35,456

 

Non-GAAP net income attributable to the Company

$

59,906

 

 
 
Diluted earnings per share attributable to the Company:
Three Months Ended
September 30, 2021
 
GAAP diluted loss per share attributable to the Company

$

(0.43

)

 
Adjustments to GAAP diluted earnings per share attributable to the Company:
Stock-based compensation expense

 

0.13

 

Amortization expense

 

0.46

 

Merger and integration-related costs

 

0.01

 

Separation costs

 

0.02

 

Difference in shares used in the calculation

 

0.03

 

Tax provision recorded in excess of cash taxes paid

 

0.31

 

Non-GAAP diluted earnings per share attributable to the Company

$

0.53

 

 
Weighted average number of shares used in per share calculations excluding the effects of stock-based compensation - diluted

 

113,107

 

 
XPERI HOLDING CORPORATION
RECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW
(in thousands)
(unaudited)
 
Three Months Ended
September 30, 2021
 
Cash flow from operations

$

82,934

 

 
Adjustments to cash flow from operations:
Purchases of property & equipment

 

(3,440

)

Merger and integration costs

 

130

 

Separation-related costs

 

2,241

 

Severance costs

 

55

 

Retention payments

 

5,823

 

Adjusted free cash flow

$

87,743

 

 
XPERI HOLDING CORPORATION
RECONCILIATION FOR GUIDANCE ON
GAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS
(in millions)
(unaudited)
 
Twelve Months Ended
December 31, 2021
Low High
 
GAAP operating expense excluding COGS

$

735.0

 

$

745.0

 

Stock-based compensation -- R&D

 

(22.0

)

 

(22.0

)

Stock-based compensation -- SG&A

 

(36.0

)

 

(36.0

)

Merger, integration and separation-related expense -- R&D

 

(3.0

)

 

(3.0

)

Merger, integration and separation-related expense -- SG&A

 

(14.0

)

 

(14.0

)

Amortization expense

 

(205.0

)

 

(205.0

)

Total of non-GAAP adjustments

 

(280.0

)

 

(280.0

)

Non-GAAP operating expense excluding COGS

$

455.0

 

$

465.0

 

 
XPERI HOLDING CORPORATION
RECONCILIATION FOR GUIDANCE ON
OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW
(in millions)
(unaudited)
 
Twelve Months Ended
December 31, 2021
Low High
 
Cash flow from operations

$

205.0

 

$

225.0

 

 
Adjustments to cash flow from operations:
Purchases of property & equipment

 

(15.0

)

 

(15.0

)

Merger, integration and separation costs (1)

 

20.0

 

 

20.0

 

Adjusted free cash flow

$

210.0

 

$

230.0

 

 
(1) Includes severance costs and retention payments.

 

Xperi Investor Contact:
Geri Weinfeld, Vice President of Investor Relations
+1 818-436-1231
geri.weinfeld@xperi.com

Xperi Media Contact:
Lauren Ward
+1 310-227-9801
lauren.ward@xperi.com

Source: Xperi Holding Corp
Categories: Press Releases
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