Q1 2025 Xperi Inc Earnings Call

Operator: During today's presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions.

During todays presentation, all parties will be in a listen only mode. Following the presentation. The call will be opened for questions I would like now to now turn the call over to Sam Levenson from Arbor Advisory Group Sam. Please go ahead.

Sam Levinson: I would like to now turn the call over to Sam Levinson from Arbor Advisory Group. Sam, please go ahead. Thank you, Amy.

Sam Levenson: Thank you Amy good afternoon, and thank you for joining us as Xperia reports as first quarter 2025 financial results.

Sam Levinson: Good afternoon, and thank you for joining us as Xperi reports its first quarter 2025 financial results. With me in today's call are Jon Kirchner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there's an earnings presentation on our investor relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary.

Speaker Change: With me on today's call are John Kirshner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer.

Speaker Change: In addition to today's earnings release, there is an earnings presentation on our Investor Relations website had that experience at investor Dot experience Dot com.

Speaker Change: We encourage you to download the presentation and follow along with today's commentary.

Sam Levinson: Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections, or other statements about future events which are based on management's current expectations and beliefs and therefore subject to risks, uncertainties, and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31, 2024.

Speaker Change: Before we begin I would like to provide a few reminders first I would like to note that unless otherwise stated all comparisons are to the same period in the prior year.

Speaker Change: Second today's discussion contains forward looking statements about our anticipated business and financial performance that are predictions projections or other statements about future events, which are based on management's current expectations and beliefs, and therefore subject to risks uncertainties and changes in circumstances.

Speaker Change: For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today. Please refer to the risk factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31 2024. Please.

Sam Levinson: Please note, the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call.

Speaker Change: Please note the company does not intend to update or alter these forward looking statements to reflect events or circumstances arising after this call.

Sam Levinson: Third, we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor relations section of our website.

Speaker Change: Third we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor Relations section of our website.

Sam Levinson: Last, a replay of this conference call will be available on our website shortly after the conclusion of this call.

Speaker Change: Last a replay of this conference call will be available on our website. Shortly after the conclusion of this call.

Jon Kirchner: I will now turn the call over to Xperia's CEO, Jon Kirchner. Thank you, Sam. And thank you everyone for joining us on our first quarter 2025 earnings Q1 execution was strong as we made measurable progress on our full-year growth goals in TiVo OS and related TiVo 1 platform rollout, video over broadband IPTV household subscribers, and the proliferation of DTS Autostage footprint. These efforts put us in a good position to drive meaningful revenue growth through our media platform strategy over the next several years and realize significant increases in profitability and cash flow. Notably, this execution continues despite broad macroeconomic uncertainties that our team continues to navigate well.

Speaker Change: I will now turn the call over to a experienced CEO John Kerschner.

John Kerschner: Thank you Sam and thank you everyone for joining us on our first quarter 2025 earnings call.

John Kerschner: Q1 execution was strong as we made measurable progress on our full year growth goals and Tivo O S unrelated Tivo one platform rollout.

Speaker Change: Leo over broadband IP TV household subscribers and the proliferation of Dts auto stage footprint.

Speaker Change: These efforts put us in a good position to drive meaningful revenue growth from our media platform strategy over the next several years and realized significant increases in profitability and cash flow.

Speaker Change: Notably this execution continues despite broad macroeconomic uncertainties that our team continues to navigate well.

Jon Kirchner: From a financial standpoint, our results were in line with our expectations for the quarter and represent a good start to the year. Robert will take you through the details in just a moment, but let me first touch on a few highlights. Revenue in the quarter was $114 million. A decrease from last year primarily due to business divestitures completed during 2020. We continue to reduce our operating expenses due primarily to our focus on cost transformation. As a result, we achieved adjusted EBITDA of $16 million for the quarter, or 14% of revenue, up over 200% when compared to $5 million in the prior year quarter.

Speaker Change: From a financial standpoint, our results were in line with our expectations for the quarter and represent a good start to the year Robert will take you through the details in just a moment, but let me first touch on a few highlights revenue in the quarter was $114 million a decrease from last year, primarily due to business divestitures completed during 2012.

Speaker Change: Four.

Speaker Change: We continued to reduce our operating expenses due primarily to our focus on cost transformation.

Speaker Change: As a result, we achieved adjusted EBITDA of $16 million for the quarter.

Speaker Change: Or 14% of revenue up over 200% when compared to $5 million in the prior year quarter.

Jon Kirchner: Looking forward, we remain focused on our three growth solutions where we can see strong potential and differentiation. These are First Connected TV Advertisements. where we offer our TiVo One platform that monetizes ad-supported viewing, viewership data, and homepage engagement across smart TVs powered by TiVo and TiVo video over broadband devices. Second, In-Cabin Entertainment, where DTS AutoStage combines radio, internet metadata, and video to enhance the automotive experience, and is designed to enable long-term monetization through licensing fees, upselling features, advertising, and data. And third, TiVo Video over Broadband, where we offer an industry-leading, content-first streaming platform for our customers' IPTV linear video households, as well as broadband-only where revenue is primarily generated by monthly subscription.

Speaker Change: Looking forward, we remain focused on our three growth solutions, where we can see strong potential and differentiation.

Speaker Change: These are first connected television advertising, where we offer our tivo one platform that monetize as AD supported viewing viewership data and homepage engagement across smart Tvs powered by Tivo and Tivo video over broadband devices.

Speaker Change: In cabin entertainment for Dts Auto stage combines radio Internet meta data and video to enhance the automotive experience and is designed to enable long term monetization through licensing fees Upselling features advertising and data and.

Speaker Change: And third Tivo video over broadband, where we offer an industry leading content for streaming platform for our customers' IP TV linear video households, as well as broadband only households, where revenue was primarily generated by monthly subscriptions.

Jon Kirchner: We continue to expect each of these markets, along with our market penetration, to grow meaningfully over the next several years.

Speaker Change: We continue to expect each of these markets along with our market penetration to grow meaningfully over the next several years.

Jon Kirchner: Before we proceed further, I want to give a quick refresher on our TiVo 1 ad platform, which was discussed on our February call. TiVo One is our cross-screen ad platform for maximizing engagement and monetization on streaming devices. We are deploying TiVo One on smart TVs powered by TiVo and on TiVo IPTV-based video over broadband boxes, which are connected to smart TVs and thus power the user interface. A primary focus of this platform is delivering unique reach through home screen based ads, which advertising clients recognize as a key, common, and frequent touch point in the consumer and entertainment journey as they seek to find, watch, and enjoy the content they love.

Speaker Change: Before we proceed further I want to give a quick refresher on our Tivo, one AD platform, which was discussed on our February call.

Speaker Change: Tivo, one is our cross screen AD platform for maximizing engagement and monetization on streaming devices.

Speaker Change: We are deploying tivo, one on smart Tvs powered by Tivo and on Tivo IP TV base video of our broadband boxes, which are connected to smart Tvs and thus power the user interface.

Speaker Change: Primary focus of this platform is delivering unique reach through home screen based ads, which advertising clients recognize as a key common in frequent touch point in the consumer and entertainment journey as they seek to find watch and enjoy the content they love.

Jon Kirchner: Additionally, we generate advertising revenue from free ad-supported television content where video ads are sold primarily programmatically. For our most important near-term business metric, we finished the quarter with 2.5 million monthly active users on the TIVO 1 ad. This includes rollout into the U.S. market through updates to our video over broadband device footprint and the launch of sharp TVs powered by We define TiVo 1 monthly active users as a unique device that is connected to the TiVo video service, which includes the TiVo 1 advertising. at least once within the last 30 days. While our TiVo 1 monthly active user footprint remains weighted in Europe where we ramped smart TVs last year.

Speaker Change: Additionally, we generate advertising revenue from free AD supported TV content, where video ads are sold primarily programmatically.

For our most important near term business metrics, we finished the quarter with $2 5 million monthly active users on the Tivo one AD platform. This.

Speaker Change: This includes rollout into the U S market through updates to our video over broadband device footprint and the launch of sharp Tvs powered by Tivo.

Speaker Change: We define tivo one monthly active users is a unique device that is connected to the Tivo video service, which includes the Tivo one advertising platform at least once within the last 30 days.

Speaker Change: While our Tivo one monthly active user footprint remains weighted in Europe, where we ramped smart Tvs last year.

Jon Kirchner: We've started to gain a user footprint in the U.S. market through the deployment of TiVo One to certain video over broadband devices. including IPTV's set-top box. Smart TV shipments with Sharp.

Speaker Change: We've started to gain a user footprint in the U S market through the deployment of Tivo wanted to certain video over broadband devices, including IP TV set top boxes, and smart TV shipments with sharp.

Jon Kirchner: Let me now walk you through some of our recent achievements within each market, beginning with media. During the quarter, we successfully began the rollout of a new TiVo One homepage ad unit to certain TVs and video over broadband devices, where this ad unit takes over the majority of the home screen. We've now executed our first media and entertainment pilot advertising campaigns using this ad. And we're pleased with the engagement, click-through rates, and viewership we delivered for our average. In the U.S., Sharp began selling Sharp TVs powered by TiVo through select regional retailers, including P.C. Richard & Son and BrandSmart USA.

Speaker Change: Let me now walk you through some of our recent achievements within each market beginning with media platform.

Speaker Change: During the quarter, we successfully began the rollout of a new Tivo, one homepage AD unit to certain Tvs and video of our broadband devices, where this AD unit takes over the majority of the <unk> home screen.

Speaker Change: We've now executed our first media and entertainment pilot advertising campaigns using this AD unit and we're pleased with the engagement click through rates and viewership we delivered for our advertisers.

Speaker Change: In the U S sharp began selling sharp Tvs powered by Tivo through select regional retailers, including PC, Richard Sun and brand Smart USA.

Jon Kirchner: In Europe, Skyworth under the Mets brand started selling Mets TVs powered by TiVo in the UK. We now have dozens of brands selling across Europe.

Speaker Change: In Europe Sky worth under the match brand started selling <unk> Tvs powered by Tivo in the UK.

Speaker Change: We now have dozens of brands selling across Europe.

Jon Kirchner: From a content perspective, we launched more than 80 additional entertainment content partner applications onto the TiVo OS platform. Broadly speaking, streaming services have continued to adopt TiVo OS as an emerging independent media platform. and appreciate the value of its agnostic, content-first discovery feature.

Speaker Change: From a content perspective, we launched more than 80 additional entertainment content partner applications onto the Tivo OS platform.

Speaker Change: Broadly speaking streaming services have continued to adopt <unk> as an emerging independent media platform and appreciate the value of its agnostic content first discovery features an easy to use technical platform.

Jon Kirchner: Easy-to-Use Technical Platform. Notable partners launched in the quarter include global brands such as Tubi, Sports Network DAZN, and Red Bull TV as well as multiple leading local streaming partners including Mediaset, Infinity, and Movistar. We also published Sony Channel. which are curated, genre-specific, ad-supported streaming or fast channels comprised of premium content from Sony's robust catalog of movies and TV programs. To help our partners bring TVs powered by TiVo to market faster, we completed important engineering initiatives designed to expand the diversity of the global supply chain. options they have. This will allow for broader and more flexible sourcing and multiple production.

Speaker Change: Notable partners launched in the quarter include global brands, such as <unk> Sports network design, and Red Bull TV as well as multiple leading local streaming partners, including Mediaset Infinity and Movistar.

Speaker Change: We also published Sony channels, which are curated genre specific AD supported streaming our fast channels comprised of premium content from salaries robust catalog of movies and TV programming.

Speaker Change: To help our partners bring television powered by Tivo to market faster, we completed important engineering initiatives designed to expand the diversity of the global supply chain.

Speaker Change: The options. They have this will allow for a broader and more flexible sourcing and multiple production regions.

Jon Kirchner: Moving to Connected Car, we had a very productive and successful quarter. including the signing of two multi-year HD radio agreements with Tier 1 manufacturers. Given the general uncertainty in the macro market related to tariffs and consumer We believe these agreements are valuable to ensure longer term customer commitment to our technology. to grow penetration of HD radio. There were 15 models that launched with HD Radio in the quarter, including Lincoln Navigator, Honda Passport, Lucid Motors Gravity, Nissan Armada, Toyota 4Runner, and Audi Q4. Several new vehicles also launched with DTS Autostage during the including BMW iX1 and 2 Series Grand Cougar.

Speaker Change: Moving to connected car, we had a very productive and successful quarter include.

Speaker Change: Including the signing of two multi year HD radio agreements with tier one manufacturers.

Speaker Change: Given the general uncertainty in the macro market related to tariffs and consumer confidence. We believe these agreements are valuable to ensure longer term customer commitment to our technologies and to grow penetration of HD radio over time.

Speaker Change: There were 15 models that launched with HD radio in the quarter, including Lincoln navigator onto passport lucid motors gravity, Nissan Armada, Toyota four runner and Audi Q five.

Speaker Change: Several new vehicles also launch with Dts auto stage during the quarter, including BMW IX, one and two series Gran coup.

Jon Kirchner: Ford Expedition Max, Hyundai Palisade, and the Tesla Model One. DTS Autostage finished the quarter with a footprint of 11 million vehicles in over 130 countries. And lastly, previously announced DesignWin Audi has now launched DTS Autostage video service powered by TiVo in Audi vehicles.

Speaker Change: Ford Expedition, Max Hyundai Palisade, and the Tesla model y.

Speaker Change: TTS auto stage finished the quarter with a footprint of 11 million vehicles and over 130 countries and lastly, previously announced design win Audi has now launched Dts auto stage video service powered by Tivo and Audi vehicles in Japan.

Jon Kirchner: Within the pay TV market, we continue to see strong growth for our IPTV business as we finish the quarter with over 2.75 million video over broadband subscriber 36% year-over-year income. Notably, we signed several new operators bringing the cumulative total of TiVo broadband wins to over 30. During the quarter we began updating our video over broadband footprint in the U.S. to enable enhanced sports. Including personalized league and sports carousel. This code update also includes the TiVo One homepage advertisement. Importantly, the TiVo video over broadband platform controls the user interface of the consumer's smart TV. where engagement is over four hours of overall content viewership per day.

Speaker Change: Within the pay TV market, we continued to see strong growth for our IP TV business as we finished the quarter with over $2 75 million video over broadband subscriber households, a 36% year over year increase.

Speaker Change: Notably we signed several new operators in the quarter, bringing the cumulative total of Tivo broadband wins to over 30.

Speaker Change: During the quarter, we began updating our video over broadband footprint in the U S to enable enhanced sports features including personalized league in sports care ourselves.

Speaker Change: This code update also includes the Tivo, one homepage advertising unit.

Speaker Change: Importantly, the Tivo video over broadband platform controls the user interface of the consumer Smart TV.

Speaker Change: Our engagement is over four hours of overall content viewership per day.

Jon Kirchner: Turning to Consumer Electronics. successfully signed several long-term DTS audio renewal Including with customers. that includes Skyworth, TCL, Hisense, TPV, and Best. We also signed important IMAX enhanced renewals with Honor and Philips TPV.

Speaker Change: Turning to consumer electronics.

Speaker Change: We successfully signed several long term dts audio renewal agreements, including with customers.

Speaker Change: Does that include Sky worth Tcl, <unk>, TPB and best buy.

Speaker Change: We also signed important IMAX enhanced renewals with honor and Philips TPB.

Jon Kirchner: Expanded content commitments with Sony Pictures, and continued to add new hit titles to the Disney Plus lineup to support broader product In summary, during the quarter we made progress, great progress, in our strategic initiatives and remain on track to achieve the 2025 goals outlined in our last investment report. As we work to deliver on these goals, we expect to position ourselves for overall revenue growth in 2026, along with related gains and profitability and cash.

Speaker Change: Expanding content commitments with Sony Pictures and continue to add new hit titles to the Disney plus lineup to support broader product licensing.

Speaker Change: In summary during the quarter, we made progress great progress in our strategic initiatives and remain on track to achieve the 2025 goals outlined in our last investor call.

Speaker Change: As we work to deliver on these goals, we expect to position ourselves for overall revenue growth in 2026, along with related gains in profitability and cash flow.

Robert Andersen: With that, I'll turn the call over to Robert to discuss our financials. Thanks, Jon. As usual, I'll be covering two main areas during this call. I'll first go through the financial results and provide commentary for the quarter. And in a second, I'll discuss our financial outlook.

Speaker Change: With that I'll turn the call over to Robert to discuss our financials Robert.

Robert Andersen: Thanks, John.

Robert Andersen: As usual I'll be covering two main areas during this call.

Robert Andersen: I will first go through the financial results and provide commentary for the quarter.

Robert Andersen: And second I'll discuss our financial outlook.

Robert Andersen: Let me begin with a quarter. Total revenue for the first quarter was $114 million, a decrease of 4% from last year's $119 million. and lower by 2% when adjusting for the perceived... KTV, our largest revenue category, posted $50 million in the quarter, a decrease of 12% as strong growth in IPTV, which was up 25%. was more than offset by a decrease in our core pay TV business. partly due to certain minimum guarantee revenue that occurred last year. Consumer Electronics was $23 million, a decrease of 5% when excluding the divestiture of perceived The reduction was primarily due to lower revenue on softer production volume of certain consumer electronics products.

Robert Andersen: Let me begin with the quarter's results.

Robert Andersen: Total revenue for the first quarter was $114 million, a decrease of 4% from last year's $119 million and lower by 2% when adjusting for the perceived divestiture.

Robert Andersen: Pay TV <unk>, our largest revenue category posted $50 million in the quarter, a decrease of 12% as strong growth in IP TV, <unk>, which was up 25% was more than offset by a decrease in our core pay TV business, partly due to certain amendment minimum guarantee revenue.

Robert Andersen: That occurred last year.

Robert Andersen: Consumer electronics was $23 million, a decrease of 5% when excluding the divestiture of perceive.

Robert Andersen: The reduction was primarily due to lower revenue on softer production volume of certain consumer electronics products.

Robert Andersen: The Connected Car rose 37% to finish at $33 million. The significant growth was primarily due to minimum guarantee licensing arrangements. for HD Radio that occurred during the quarter. Partially offset by lower automotive volumes, utilizing HD radio and audio-based solutions. Media Platform at $8 million, was lower than last year by 30%. due primarily to lower middleware revenue associated with a license agreement and audit settlement that occurred last year. along with a time shift of certain advertising commitments year over year. We expect these commitments to be fulfilled later this year.

Robert Andersen: Connected car rose, 37% to finish at $33 million.

Robert Andersen: The significant growth was primarily due to minimum guaranteed licensing arrangements for HD radio that occurred during the quarter.

Robert Andersen: Partially offset by lower automotive volumes utilizing HD radio and audio based solutions.

Robert Andersen: Media platform at $8 million was lower than last year by 30% due primarily to lower middleware revenue associated with our license agreement and audit settlement that occurred last year.

Robert Andersen: Along with a time shift of certain advertising commitments year over year.

Robert Andersen: We expect these commitments to fulfill the later this year.

Robert Andersen: Moving to the income statement, our non-GAAP adjusted operating expense for the quarter was $76 million, an improvement of 15 million or 17% from the prior year. Approximately 80% of this expense improvement is savings from business optimization efforts. And the remaining 20% is from business divestment. Our adjusted EBITDA was $16 million, resulting in an adjusted EBITDA margin of $14 million. Notably, we more than tripled adjusted EBITDA year over year, and expanded the adjusted EBITDA margin rate by over 900 basis points. Achieving a 14% margin in a seasonally weaker quarter demonstrates significant progress toward our full year goal of 16% to 18% adjusted EBITDA.

Robert Andersen: Moving to the income statement, our non-GAAP adjusted operating expense for the quarter was $76 million, an improvement of $15 million or 17% from the prior year.

Robert Andersen: Approximately 80% of this expense improvement as savings from business optimization efforts and the remaining 20% is from business divestitures.

Robert Andersen: Our adjusted EBITDA was $16 million, resulting in an adjusted EBITDA margin of 14%.

Robert Andersen: Notably, we more than tripled adjusted EBITDA year over year and expanded the adjusted EBITA margin rate by over 900 basis points.

Robert Andersen: Achieving a 14% margin in a seasonally weaker quarter demonstrates significant progress towards our full year goal of 16% to 18% adjusted EBITDA margin.

Robert Andersen: Our non-GAAP earnings per share was $0.016. A $0.21 increase from last year's $0.05 loss per share. Moving to the balance sheet, the company ended the quarter with $88 million of cash and cash equivalent. A decrease from the 4th quarter of 2024 due to 22 million of operating cash usage, 4 million of investing activities. 16 million of finance.

Robert Andersen: Our non-GAAP earnings per share was <unk> 16.

Robert Andersen: A 21% increase from last year's five loss per share.

Robert Andersen: Moving to the balance sheet. The company ended the quarter with $88 million of cash and cash equivalents.

Robert Andersen: A decrease from the fourth quarter of 2024 due to $22 million of operating cash usage $4 million of investing activities and $16 million of financing activities.

Robert Andersen: In late February, we completed the financing arrangement with PNC Bank for a $55 million line of credit. This line is backed by our accounts receivable assets. for which we retired $10 million of our prior debt and refinanced the remaining $40 million under the new line of credit. This line has a three-year term, and our current borrowing rate is one month SOFR plus a hundred and ninety basis.

Robert Andersen: In late February we completed the financing arrangement with PNC bank for $55 million line of credit.

Robert Andersen: This line is backed by our accounts receivable assets.

Robert Andersen: For which we retired $10 million of our prior debt and refinance the remaining $40 million under the new line of credit.

Robert Andersen: This line has a three year term and our current borrowing rate is one month sofer, plus 190 basis points.

Robert Andersen: Operating cash in the quarter was a usage of $22 million due primarily to the pay down of accrued liabilities of $15 million. principally for bonus amounts for fiscal year 2024 and from an increase in unbilled contract receivables related to minimum guarantee contract arrangements. within the connected car category.

Robert Andersen: Operating cash in the quarter was a usage of $22 million due primarily to the pay down of accrued liabilities of $15 million.

Robert Andersen: Principally for bonus amounts for fiscal year 2024.

Robert Andersen: And from an increase in Unbilled contract receivables related to minimum guarantee contract arrangements within the connected car category.

Robert Andersen: Notably, operating cash improved by $28 million compared to Q1 of last year.

Robert Andersen: Notably operating cash includes by $28 million compared to Q1 of last year.

Robert Andersen: With regard to our financial outlook, despite various macroeconomic uncertainties, we are We are maintaining our outlook for the Thus far, the impact of tariffs on our business appears to be modest and within the range of planning outcomes set for the year. We will continue to monitor if any changes in Outlook are warranted as new information becomes available.

Robert Andersen: With regard.

Robert Andersen: Our financial outlook, despite various macroeconomic uncertainties, we are maintaining our outlook for the year. Thus.

Robert Andersen: Thus far the impact of tariffs on our business appears to be modest and with us in the range of planning outcome set for the year we.

Robert Andersen: We will continue to monitor if any changes in outlook are warranted as new information becomes available.

Operator: That concludes our prepared remarks. Let's now open the call for questions. Operator? Thank you.

Robert Andersen: That concludes our prepared remarks, let's now open the call for questions operator.

Operator: The floor is now open for questions. To enter the queue, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, simply press star and the number one. We'll pause for a moment to compile the Q&A roster.

Robert Andersen: Thank you thus.

Speaker Change: The floor is now open for questions.

Speaker Change: <unk> entered the queue. Please press star followed by the number one on your telephone keypad if.

Speaker Change: If you would like to withdraw your question again simply press star and the number one.

Speaker Change: Well pause for a moment to compile the Q&A roster.

Hamed Khorsand: Our first question comes from the line of Hamed Khorsand with BWS. Your line is now open. Hi, so starting off with the IPTV and the user base, it's now at 2.75. But you sound like you also added a lot more service providers.

Speaker Change: Our first question comes from the line of Hamas correspond with Dws. Your line is now open.

Speaker Change: Hi.

Speaker Change: So starting off with the IP TV.

Speaker Change: User base is now $2 75.

Speaker Change: It sounded like you add also added a lot more.

Speaker Change: Service providers so.

Jon Kirchner: So assuming that you get to 3 million soon, what's the timeframe as far as monetizing that and getting to a higher baseline revenue? What will it take? Well, I think there's, I think there's You know, kind of a continued quarter over quarter effort to assist with deployments and more wins that ultimately will drive subscribership revenue. So, you know, I'm not sure. what specifically, Hamid, you're seeking to answer, other than, you know, I think you'll see those improvements play out through the year, and obviously, consequent revenue increases. I think, simultaneously, some of the video over broadband wins.

Speaker Change: Assuming that you get the $3 million.

Speaker Change: Soon.

Speaker Change: What's the timeframe as far as monetizing that.

Speaker Change: And getting to a higher baseline revenue.

Speaker Change: What will it take.

Speaker Change: Well I think there is.

Speaker Change: There is.

Speaker Change: Kind of a continued quarter over quarter.

Speaker Change: To assist with deployments and more wins that ultimately will drive subscriber ship revenue so.

Speaker Change: I'm not sure.

Speaker Change: What specifically commager youre seeking to answer other than I think you'll see those improvements play out through the year and obviously.

Speaker Change: Consequent revenue increases I think simultaneously some of the video of our broadband wins.

Jon Kirchner: You know, at the end of the day are less, you know, about subscription revenue as they are about the, the longer tail of monetization that can happen on the platform. And as we talked about, this is an area where we're, you know, starting and have begun to roll out various. Code updates that will enable us to bring, you know, a more robust kind of ad platform.

Speaker Change: At the end of the day are less about subscription revenue as they are about the.

Speaker Change: The longer tail of monetization that can happen on the platform and as we talked about.

Speaker Change: This is an area where we're starting.

Speaker Change: And have begun to rollout various.

Speaker Change: Code updates that will enable us.

Speaker Change: To bring a more robust kind of AD platform onto those set top boxes and that will in turn begin to yield.

Jon Kirchner: Unknown Executive, Xperi comes in parallel with what we're I guess I'm trying to get to is, do you have the manpower and capacity to handle that 50% increase in the number of IPTV customers quarter on quarter? Well, it's not necessarily up 50%. I'm not sure where you got that number. Last quarter, you guys said it was 20 customers. Now you're saying it's 30 customers. and the sheer number of customers. Not all those deployments will happen immediately and simultaneously. They all have separate schedules under which they'll roll out. But in short, yes, we're staging and working with those customers to make sure not only we can handle it, but ultimately they come online.

Speaker Change: Monetization revenue that that that.

Speaker Change: That comes in parallel with what we're doing on smart Tvs.

Speaker Change: I guess I'm trying to get to is do you have the manpower and capacity to handle that 50% increase in the number of IP TV customers quarter on quarter.

Speaker Change: Well, it's it's it's not necessarily up 50% I'm not sure where you got that number.

Speaker Change: So last quarter you guys said it was 20 customers now youre, saying its 30 customers.

Speaker Change: And the sheer number of customers sharing numbers.

Speaker Change: Sorry.

Speaker Change: Not all of those deployments will happen immediately and simultaneously they all have separate schedules under which they will rollout but in short.

Speaker Change: Yes, we're staging and working with those customers to to make sure not only we can handle it but ultimately they come on line over time.

Jon Kirchner: Okay, and then my final question was going to be about cash flow. Is there a specific quarter we would see, you know, the company have a positive cash flow that you're guiding to? Is it all happening in Q4? No, it doesn't. It's not all completely back end weighted. Q1 is seasonally our weakest quarter because we paid deferred liabilities related to last year. So you'll see that pretty much any year for us. Given that we've guided to be positive for the year, I think you're going to expect the balance of the year to be in the positive category, certainly.

Speaker Change: Okay and then my final question was going to be about cash flow.

Speaker Change: Is there a specific quarter, we would see.

Speaker Change: With the company have.

Speaker Change: Positive cash flow, you're guiding to is all happening in Q4.

Speaker Change: No. It doesn't it's not all completely back end weighted Q1 is seasonally our weakest quarter, because we paid deferred liabilities related to last year, so you'll see that pretty much any year for us.

Speaker Change: Given that we've guided to be positive for the year. I think you can expect the balance of the year to be in the positive category certainly in the second half.

Hamed Khorsand: Okay, thank you.

Speaker Change: Okay. Thank you.

Robert Andersen: Thank you Robert.

Operator: Thank you.

Operator: Again, if you would like to ask a question and enter the queue, please press star followed by the number one on your telephone keypad.

Robert Andersen: Thank you again, if you would like to ask a question that enter the queue. Please press star followed by the number one on your telephone keypad.

Matt Galinko: The next question comes from Matt Galinko with Maxim Group. Your line is now open.

Speaker Change: The next question comes from Matt <unk> with Maxim Group. Your line is now open.

Jon Kirchner: You just, I'm not sure if I missed it in the prepared remarks, but did you or can you speak to, you know, any additional OEMs in the pipeline for, you know, for TV companies? We didn't necessarily call it out specifically in the script, but broadly speaking, we expect to add at least one. you know, to two TV partners in the course of this year, beyond the eight we already Got it.

Speaker Change: I'm not sure if I missed it in the prepared remarks, but.

Speaker Change: Did you or can you speak to.

Speaker Change: Any additional.

Oems in the pipeline for.

Speaker Change: For the TV company.

Speaker Change: We didn't necessarily call it out specifically in the script, but broadly speaking, we expect to add at least one.

Speaker Change: To two <unk>.

Speaker Change: TV partners in the course of this year beyond the eight we already have.

Speaker Change: Got it and any changes to kind of the number of active users that you're targeting by end of year or just.

Jon Kirchner: And any changes to kind of the number of active users that you're targeting by, you know, end of year or, you know, any just changes to that schedule? And maybe can you maybe share a little bit more color around, you know, whether tariffs have any influence or potential to influence the targets you set for, you know, number of active users? Sure, so we had talked about looking to exit the year with 5 million monthly active users. I think we are very much on track and I think, you know, stepping back as we talked about, you know, by the time we exit next year, we expect to be at at least that 7 million number, you know, or better.

Speaker Change: The changes for that schedule and maybe can you.

Speaker Change: Maybe share a little bit more color.

Speaker Change: Whether it's tariffs have any influence or have the potential to influence the.

Speaker Change: Targets you set for.

Speaker Change: Number of active users.

Speaker Change: Sure so.

Speaker Change: We had talked about looking to exit the year with $5 million.

Speaker Change: Monthly active users I think we are very much on track and I think.

Speaker Change: Stepping back as we talked about by the time, we exit next year, we expect to be at at least at 7 million number.

Jon Kirchner: I think that very much is on track based on that. The planning and production activity and the partners that we have, you know, to what extent tariffs will will ultimately impact things. Obviously, they create a pretty fluid environment, you know, where there's a bit lower visibility and how that ultimately flows through. You know, there's obviously some portion of the TV volume is manufactured in Asia might be subject to tariffs. But depending on how the tariffs come down and where, you know, final assembly and other things happen in various markets. You know, we may or may not be.

Speaker Change: Better I think that very much.

Speaker Change: <unk> is on track based on all that.

Speaker Change: Hey.

Speaker Change: The planning and production activity in the partners that we have.

Speaker Change: To what extent tariffs will ultimately impact things, obviously, they create a pretty fluid environment.

Speaker Change: Where there is a bit lower visibility in how that ultimately flows through.

Speaker Change: Theres, obviously some portion of the TV volume is manufactured in Asia might be subject to tariffs.

Speaker Change: But depending on how the tariffs come down and where final assembly and other things happen in various markets.

Speaker Change: We may or may not be.

Speaker Change: Meaningfully impacted by that so at this point I think.

Speaker Change: We're not hearing anything that would indicate that there is anything about that plan that is that is diverted meaningfully from what we've expected.

Unknown Executive: Unknown Executive, Xperi Unknown Executive, Xperi Unknown Executive, Xperi Thanks Matt.

Speaker Change: And we'll continue to stay close to it.

Speaker Change: Obviously should should anything change.

Speaker Change: Great. Thank you.

Speaker Change: Thanks, Matt.

Jason Kreyer: It looks like our next question comes from Jason Kreyer with Craig Hallam. Your line is now open. Great, thank you.

Speaker Change: And it looks like our next question comes from Jason <unk> with Craig Hallum. Your line is now open.

Speaker Change: Great. Thank you. This is Kyle on for Jason and apologies if any of this has been addressed but a couple last and theyre talking about the tariffs, but can you just kind of talk about what kind of macro factors you are contemplating in the guide.

Jon Kirchner: This is Cal for Jason and apologies if any of this has been addressed, but you know, I caught the last end there talking about the tariffs, but can you just kind of talk about what kind of macro factors you're contemplating in the guide? Well, I think we're at this point, we're maintaining the guide that we previously provided, you know, in part because, you know, while there are You know, various uncertainties we see out there. It's not yet clear that that is going to impact how we think about the range we provided for this year, you know, and so I think is always, you know, as we set as we set plans and our guidance range.

Speaker Change: Well I think we're at this point, we are maintaining the guide that we previously.

Speaker Change: <unk> provided in part because while there are.

Speaker Change: Various uncertainties, we see out there it's not yet clear that that is going to impact how we think about the range. We provided for this year.

Speaker Change: I think as always as.

Speaker Change: As we said.

Speaker Change: As we said plans and our guidance ranges.

Jon Kirchner: Often, and very intentionally, you know, ensure there's a lot of different ways to get within the range. So, as we sit here at this point, you know, I think we are comfortable where we are. We'll obviously watch it, you know, very closely as we go ahead. But, you know, we're busy executing, even in a world that, you know, has a certain amount of fluidity. And, you know, as I said, I think we've had some very, very strong execution as it relates to.

Speaker Change: Often in very intentionally.

Speaker Change: Im sure Theres, a lot of different ways to get within the range. So.

Speaker Change: As we sit here at this point.

Speaker Change: I think we are we are comfortable where we are <unk>, obviously watch it very closely as we go ahead.

Speaker Change: We're busy executing even in a world that has a certain amount of fluidity.

Speaker Change: And as I said I think we've had some very very strong execution as it relates to Q1.

Speaker Change: Okay.

Unknown Executive: Great.

Jon Kirchner: And then maybe just kind of pivoting over to the TiVo OS, you know, you talked a little bit about, you know, the new TiVo One, the homepage unit that you're rolling out here. So just curious the opportunity that you see there to potentially accelerate your ARPU growth with these, you know, more flagship units. Well, I think there's a couple of things going on. First of all, that that homepage ad unit is a very, very valuable piece of real estate, you know, said simply. And it's one that that obviously advertisers have a strong interest in. So our ability to roll out that ad unit across our platform of not only smart TVs, but but ultimately, as we begin to roll it out across our broader IPTV video over broadband footprint.

Speaker Change: Great and then maybe just kind of pivoting over to the Tivo OTA, you talked a little bit about.

Speaker Change: The new Tivo, one, but the homepage unit that Youre rolling out here. So just curious the opportunity that you see there to potentially accelerate.

Speaker Change: <unk> growth with these more flagship units.

Speaker Change: Well I think Theres, a couple of things going on first of all that that homepage AD unit is.

Speaker Change: Very very valuable piece of real estate.

Speaker Change: Said simply.

Speaker Change: And it's one that that obviously advertisers have a strong interest and so our ability to rollout that AD unit across our platform of not only smart Tvs, but ultimately.

Speaker Change: As we begin to roll it out across our <unk>.

Speaker Change: Our broader IP TV video for broadband footprint.

Jon Kirchner: Where we know there is a lot of very active viewership obviously puts us in a position, you know, to begin to turn that monetization wheel better, and I think, you know, we've done a lot of work to, you know, to make sure these updates can successfully roll out and land, you know, on devices. You know, and then, as we said, we're doing, we're doing various, various, you know, pilots to ensure that, that, you know, all is going well. So, I think it will have a positive impact, you know, on what we're doing. I think we've long planned for this to be part of the mix.

Speaker Change: Where we know there is a lot of very active viewership, obviously puts us in a position.

Speaker Change: To begin to turn that monetization wheel.

Speaker Change: The better and I think.

Speaker Change: We've done a lot of work to make sure. These updates can successfully rollout and land on devices.

Speaker Change: And as we said we're doing what.

Speaker Change: We're doing various various pilots to ensure that that.

Speaker Change: All is going well, so I think it will have a positive impact.

Speaker Change: What we're doing I think we've long planned for this to be part of the mix. So it's not something that came out of the blue that we're just adding.

Jon Kirchner: So, it's not something that came out of the blue that we're just adding, but this is part of our strategy of ultimately, you know, trying. Over that longer arc, accelerate more and better monetization and offer more compelling ad products to our advertisers.

But this is part of our strategy of ultimately.

Speaker Change: Trying to.

Speaker Change: Over over that longer arc accelerate more and better monetization and offer more compelling add products to our advertiser partners.

Jon Kirchner: Great. And then if I could just, you know, follow up with one more, just curious if you have, you know, any sort of incremental updates on the US TiVo OS devices as these rollouts continue to progress. Obviously, still early days as, you know, the sharp volumes are naturally small, we expect more TVs with an additional partner to... to hit the market as we go through the balance of this year.

Speaker Change: Great and then if I could just follow up with one more.

Speaker Change: Just curious if you have any sort of incremental updates on the U S. T. Bo OS devices. These rollouts continue to progress.

Speaker Change: Obviously, it's still early days as the sharp sharp volumes are naturally small we expect more.

Speaker Change: Tvs with an additional partner too.

Speaker Change: To hit the market as we go through the balance of this year and then coupled with that we have active.

Jon Kirchner: And then coupled with that, we have active, you know, update programs going on with respect to these set-top. Box, video over broadband devices. And so, you know, as we think about US footprint, it really is going to be the combination of these two things, as we move into the back half and begin to see that, you know, that scale reach the point where it's, you know, of more interest to advertisers, and we can begin to, you know, drive monetization and an ever kind of increasing Great, thank you.

Speaker Change: Update programs going on with respect to the set top.

Speaker Change: Fox video of our broadband devices and so as we think about U S footprint. It really is going to be the combination of these two things.

Speaker Change: As we move into the back half and begin to see that.

Speaker Change: That scale reached the point, where it's more interest to advertisers and we can begin to drive monetization and an ever increasing fashion.

Speaker Change: Okay.

Speaker Change: Great. Thank you.

Operator: Thank you so much. There are no further questions at this time.

Speaker Change: Thank you so much there are no further questions at this time, so I'd like to turn the call back over to CEO, Jon Kirchner for closing remarks.

Jon Kirchner: So I'd like to turn the call back over to CEO Jon Kirchner for closing remarks. Thank you, Amy. And thanks everyone for joining today's call. We're pleased with the milestones we continue to achieve to support the long term revenue growth we expect to generate through media platform, video over broadband and connected car. I'd like to thank our customers and broad ecosystem of partners for their continued support.

Speaker Change: Thank you Amy and thanks, everyone for joining today's call. We're pleased with the milestones we continue to achieve to support the long term revenue growth, we expect to generate through media platform video over broadband and connected car I'd like to thank our customers and broad ecosystem of partners for their continued support I would also like to <unk>.

Jon Kirchner: I'd also like to thank our employees for their hard work toward realizing our strategic and financial Look forward to reviewing our Q2 results with you in August. Thank you so much.

Speaker Change: Thank our employees for their hard work towards realizing our strategic and financial goals. We look forward to reviewing our Q2 results with you in August and operator. This concludes today's call.

Speaker Change: Thank you. So much. This concludes today's conference call you may now disconnect.

Operator: This concludes today's conference call. You may now disconnect.

Operator: Please wait, the conference will begin shortly.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: Yes.

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Speaker Change: Great.

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Speaker Change: Yes.

Speaker Change: Sure.

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