Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Xperi Holding Corporation Announces Fourth Quarter 2021 Results By: Xperi Holding Corp via Business Wire February 23, 2022 at 16:05 PM EST Xperi Holding Corporation (Nasdaq: XPER) (the “Company”, “Xperi” or “we”) today announced financial results for the fourth quarter ended Dec. 31, 2021. “Our fourth quarter performance was solid, and we finished the year with revenue around the mid-point of our guidance and earnings above expectations. I’m proud of how our team has navigated the shifting pandemic challenges to position the Company for success,” said Jon Kirchner, chief executive officer of Xperi. “Importantly, we continued to successfully deliver against the key strategic objectives we set following our merger with TiVo nearly two years ago. To that end, we are thrilled to announce a new agreement with Micron, a strong indicator of the industry’s continued move toward hybrid bonding as a key enabling technology.” Fourth Quarter 2021 Financial Highlights: Revenue of $214.4 million for the quarter, compared to $433.9 million for Q4 2020, which included prior period revenue from the Comcast agreement. Quarterly revenue was up more than 2% excluding prior period Comcast revenue. GAAP loss per share of $(0.14) and non-GAAP earnings per share of $0.30. Cash Flow from Operations of $68.9 million. Adjusted Free Cash Flow1 of $65.3 million. Repurchased $25.1 million of common stock. 1Adjusted 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. Full Year 2021 Financial Highlights: Revenue of $877.7 million for the full year 2021. GAAP loss per share of $(0.53) and non-GAAP earnings per share of $2.03. Cash Flow from Operations of $234.8 million. Returned over $100 million to stockholders through dividends and share repurchases. Fourth Quarter 2021 Business and Recent Operating Highlights: IP Licensing Business (Revenue: $89.7 million) Increased go-forward average annual revenue baseline from $350 million to $375 million. Entered into a new multi-year license agreement with Micron Technology, Inc., which covers our hybrid bonding IP. Launched new brand for the IP licensing business, “Adeia.” Product Business (Revenue: $124.7 million) Pay-TV business highlights: IPTV subscribers grew organically by more than 5 times year-over-year. Added several new operator IPTV design wins, including Breezeline. Completed the integration of MobiTV, now referred to as TiVo’s Managed IPTV service. Consumer Electronics business highlights: Launched IMAX Enhanced on LG Soundbars and Vestel TVs. Increased Sony Pictures IMAX Enhanced content offerings to more than 160 unique titles. Play-Fi wireless won multiple innovation awards, including being named a CES 2022 Innovation Awards Honoree. Connected Car business highlights: Toyota will include HD Radio as a standard feature across its entire next generation infotainment system in the U.S. Sixteen car companies are testing DTS AutoStage in Europe, North America and Asia; and multiple partners, including two major OEMs, are in advanced stages of testing. Achieved important industry A-SPICE certification for the DTS AutoSense driver monitoring solution. Media Platform business highlights: Continued to integrate content onto the TiVo platform, and added Discovery+, PBS, and CineLife to TiVo Stream 4K and TiVo+. TiVo Stream 4K now covers all major streaming services. Released “Video Price-Based Auction” solution for TiVo’s CTV ad inventory, driving increasing fill rates. Environment Social & Governance (ESG) Earlier this month, the Company published its first annual ESG report. During 2021, Xperi leadership met with employees across its global workforce and through thoughtful, candid conversations on diversity, equity, inclusion, and its environmental footprint, completed a robust analysis to identify and prioritize the ESG issues material to the Company. The report can be found on the Company's website here: ESG Report. Capital Allocation During the quarter, the Company repurchased $25.1 million of common stock. On Dec. 20, 2021, the Company paid $5.2 million to stockholders of record on Nov. 29, 2021, for a quarterly cash dividend of $0.05 per share of common stock. On Feb. 3, 2022, the Board of Directors declared a dividend of $0.05 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022. Financial Outlook The Company’s full year 2022 outlook is as follows: Category GAAP Outlook Non-GAAP Outlook Revenue $910M to $950M $910M to $950M COGS $120M to $130M $120M to $130M Operating Expense excluding COGS* $725M to $755M $490M to $520M Interest Expense ~ $36M ~ $36M Other Income ~ $3M ~ $3M Cash Tax (net of refunds) $33M to $35M $33M to $35M Basic Shares Outstanding 105M 105M Diluted Shares Outstanding 107M 113M Operating Cash Flow $200M to $230M $200M to $230M *See tables for reconciliation of GAAP to non-GAAP differences. Conference Call Information The Company will hold its fourth quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Wednesday, February 23, 2022. To access the call in the U.S., please dial 800-220-8451, and for international callers, dial +1 646-828-8193. The conference ID is 2746276. All participants should dial in at least 15 minutes prior to the start of the conference call. A presentation corresponding with the conference call will be available live and in PDF format and the Company suggests utilizing the webcast link to access the call at Q4 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. 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, 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; 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 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 (Adeia, DTS, HD Radio, IMAX Enhanced, 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, Adeia, DTS, IMAX Enhanced, 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. XPER-E XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31,2021 December 31,2020 December 31,2021 December 31,2020 Revenue $ 214,449 $433,927 $ 877,696 $ 892,020 Operating expenses: Cost of revenue, excluding depreciation and amortization of intangible assets 39,194 33,023 126,758 78,357 Research, development and other related costs 63,828 70,589 232,197 195,154 Selling, general and administrative 68,331 76,770 266,085 245,356 Depreciation expense 5,807 6,103 23,801 17,918 Amortization expense 46,576 51,379 203,401 156,826 Litigation expense 4,480 6,281 11,642 20,782 Total operating expenses 228,216 244,145 863,884 714,393 Operating income (loss) (13,767 ) 189,782 13,812 177,627 Interest expense (8,573 ) (13,271 ) (38,973 ) (37,873 ) Other income and expense, net (278 ) 1,007 2,638 4,455 Loss on debt extinguishment — — (8,012 ) (8,300 ) Income (loss) before taxes (22,618 ) 177,518 (30,535 ) 135,909 Provision for (benefit from) income taxes (7,429 ) (1,126 ) 28,378 (7,887 ) Net income (loss) $ (15,189 ) $ 178,644 $ (58,913 ) $ 143,796 Less: net loss attributable to noncontrolling interest (630 ) (1,147 ) (3,456 ) (2,966 ) Net income (loss) attributable to the Company $ (14,559 ) $ 179,791 $ (55,457 ) $ 146,762 Income (loss) per share attributable to the Company: Basic $ (0.14 ) $ 1.70 $ (0.53 ) $ 1.77 Diluted $ (0.14 ) $ 1.68 $ (0.53 ) $ 1.75 Weighted average number of shares used in per sharecalculations-basic 104,249 105,498 104,735 82,840 Weighted average number of shares used in per sharecalculations-diluted 104,249 106,907 104,735 83,856 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 201,121 $ 170,188 Available-for-sale debt securities 60,534 86,947 Accounts receivable, net 143,683 115,975 Unbilled contracts receivable, net 77,677 132,431 Other current assets 36,459 40,763 Total current assets 519,474 546,304 Long-term unbilled contracts receivable 4,107 6,761 Property and equipment, net 60,974 63,207 Operating lease right-of-use assets 68,498 80,226 Intangible assets, net 817,916 1,004,379 Goodwill 851,088 847,029 Other long-term assets 147,965 153,270 Total assets $ 2,470,022 $ 2,701,176 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 7,811 $ 13,045 Accrued legal fees 7,190 5,783 Accrued liabilities 103,515 129,035 Current portion of long-term debt, net 36,095 43,689 Deferred revenue 35,136 33,119 Total current liabilities 189,747 224,671 Deferred revenue, less current portion 37,107 39,775 Long-term deferred tax liabilities 19,848 24,754 Long-term debt, net 729,392 795,661 Noncurrent operating lease liabilities 54,658 66,243 Other long-term liabilities 98,842 98,953 Total liabilities 1,129,594 1,250,057 Commitments and contingencies Company stockholders’ equity: Preferred stock — — Common stock 113 110 Additional paid-in capital 1,340,480 1,268,471 Treasury stock at cost (178,022 ) (77,218 ) Accumulated other comprehensive income (loss) (752 ) 1,264 Retained earnings 187,814 264,250 Total Company stockholders’ equity 1,349,633 1,456,877 Noncontrolling interest (9,205 ) (5,758 ) Total equity 1,340,428 1,451,119 Total liabilities and equity $ 2,470,022 $ 2,701,176 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2021 December 31, 2020 Cash flows from operating activities: Net income (loss) $ (58,913 ) $ 143,796 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment 23,801 17,918 Amortization of intangible assets 203,401 156,826 Stock-based compensation expense 58,182 39,135 Deferred income taxes (978 ) (34,670 ) Loss on debt extinguishment 8,012 8,300 Patent assets received in lieu of cash (8,787 ) — Other 5,488 19,500 Changes in operating assets and liabilities: Accounts receivable (27,615 ) 7,091 Unbilled contracts receivable 58,496 76,262 Other assets 7,497 (41,948 ) Accounts payable (5,234 ) (4,863 ) Accrued and other liabilities (27,910 ) 21,692 Deferred revenue (651 ) 18,564 Net cash from operating activities 234,789 427,603 Cash flows from investing activities: Purchases of property and equipment (13,950 ) (7,379 ) Proceeds from sale of property and equipment 19 — Net cash received (paid) for mergers and acquisitions (17,400 ) 117,424 Purchases of intangible assets (186 ) (50,935 ) Purchases of short-term investments (67,343 ) (77,178 ) Proceeds from sales of investments 49,768 11,225 Proceeds from maturities of investments 42,886 24,683 Net cash from investing activities (6,206 ) 17,840 Cash flows from financing activities: Dividends paid (20,979 ) (30,829 ) Repayment of debt (84,048 ) (520,250 ) Debt refinancing costs (4,253 ) — 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 4,855 Repurchases of common stock (100,804 ) (80,589 ) Net cash from financing activities (196,245 ) (351,136 ) Effect of exchange rate changes on cash and cash equivalents (1,405 ) 1,330 Net increase in cash and cash equivalents 30,933 95,637 Cash and cash equivalents at beginning of period 170,188 74,551 Cash and cash equivalents at end of period $ 201,121 $ 170,188 Supplemental disclosure of cash flow information: Interest paid $ 32,363 $ 31,240 Income taxes paid, net of refunds $ 30,865 $ 43,066 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 Twelve Months Ended December 31, 2021 December 31, 2021 GAAP net loss attributable to the Company $ (14,559 ) $ (55,457 ) Adjustments to GAAP net loss attributable to the Company: Stock-based compensation expense: Cost of revenue 595 1,972 Research, development and other 5,566 19,833 Selling, general and administrative 9,553 36,377 Amortization expense 46,576 203,401 Merger and integration-related costs: Transaction and other related costs recorded in selling, general and administrative 52 1,647 Severance and retention recorded in cost of revenue, excluding depreciation and amortization of intangible assets 53 849 Severance and retention recorded in research, development and other 142 2,681 Severance and retention recorded in selling, general and administrative 15 3,375 Separation costs recorded in selling, general and administrative 2,030 7,596 Gain from lease restructuring recorded in selling, general and administrative — (818 ) Loss on debt extinguishment — 8,012 Expensed debt refinancing costs — 2,590 Cash taxes paid in excess of tax provision/benefit recorded (16,143 ) (2,487 ) Non-GAAP net income attributable to the Company $ 33,880 $ 229,571 Diluted earnings per share attributable to the Company: Three Months Ended Twelve Months Ended December 31, 2021 December 31, 2021 GAAP diluted loss per share attributable to the Company $ (0.14 ) $ (0.53 ) Adjustments to GAAP diluted loss per share attributable to the Company: Stock-based compensation expense 0.15 0.56 Amortization expense 0.45 1.94 Merger and integration-related costs — 0.08 Separation costs 0.02 0.07 Gain from lease restructuring recorded — (0.01 ) Loss on debt extinguishment — 0.08 Expensed debt refinancing costs — 0.02 Difference in shares used in the calculation (0.02 ) (0.16 ) Cash taxes paid in excess of tax provision/benefit recorded (0.16 ) (0.02 ) Non-GAAP diluted earnings per share attributable to the Company $ 0.30 $ 2.03 Weighted average number of shares used in per share calculations excluding the effects of stock-based compensation - diluted 112,518 112,894 XPERI HOLDING CORPORATION RECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW (in thousands) (unaudited) Three Months Ended December 31, 2021 Cash flow from operations $ 68,876 Adjustments to cash flow from operations: Purchases of property & equipment (5,652 ) Merger and integration costs 52 Separation-related costs 2,030 Adjusted free cash flow $ 65,306 XPERI HOLDING CORPORATION RECONCILIATION FOR GUIDANCE ON GAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS (in millions) (unaudited) Twelve Months Ended December 31, 2022 Low High GAAP operating expense excluding COGS $ 725.0 $ 755.0 Stock-based compensation -- R&D (23.0 ) (23.0 ) Stock-based compensation -- SG&A (39.0 ) (39.0 ) Merger, integration and separation-related expense -- SG&A (15.0 ) (15.0 ) Amortization expense (158.0 ) (158.0 ) Total of non-GAAP adjustments (235.0 ) (235.0 ) Non-GAAP operating expense excluding COGS $ 490.0 $ 520.0 View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006039/en/Contacts Xperi Investor Contact: Geri Weinfeld, Vice President of Investor Relations +1 818-436-1231 geri.weinfeld@xperi.com Xperi Media Contact: Amy Brennan, Senior Director, Corporate Communications +1 949-518-6846 amy.brennan@xperi.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Xperi Holding Corporation Announces Fourth Quarter 2021 Results By: Xperi Holding Corp via Business Wire February 23, 2022 at 16:05 PM EST Xperi Holding Corporation (Nasdaq: XPER) (the “Company”, “Xperi” or “we”) today announced financial results for the fourth quarter ended Dec. 31, 2021. “Our fourth quarter performance was solid, and we finished the year with revenue around the mid-point of our guidance and earnings above expectations. I’m proud of how our team has navigated the shifting pandemic challenges to position the Company for success,” said Jon Kirchner, chief executive officer of Xperi. “Importantly, we continued to successfully deliver against the key strategic objectives we set following our merger with TiVo nearly two years ago. To that end, we are thrilled to announce a new agreement with Micron, a strong indicator of the industry’s continued move toward hybrid bonding as a key enabling technology.” Fourth Quarter 2021 Financial Highlights: Revenue of $214.4 million for the quarter, compared to $433.9 million for Q4 2020, which included prior period revenue from the Comcast agreement. Quarterly revenue was up more than 2% excluding prior period Comcast revenue. GAAP loss per share of $(0.14) and non-GAAP earnings per share of $0.30. Cash Flow from Operations of $68.9 million. Adjusted Free Cash Flow1 of $65.3 million. Repurchased $25.1 million of common stock. 1Adjusted 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. Full Year 2021 Financial Highlights: Revenue of $877.7 million for the full year 2021. GAAP loss per share of $(0.53) and non-GAAP earnings per share of $2.03. Cash Flow from Operations of $234.8 million. Returned over $100 million to stockholders through dividends and share repurchases. Fourth Quarter 2021 Business and Recent Operating Highlights: IP Licensing Business (Revenue: $89.7 million) Increased go-forward average annual revenue baseline from $350 million to $375 million. Entered into a new multi-year license agreement with Micron Technology, Inc., which covers our hybrid bonding IP. Launched new brand for the IP licensing business, “Adeia.” Product Business (Revenue: $124.7 million) Pay-TV business highlights: IPTV subscribers grew organically by more than 5 times year-over-year. Added several new operator IPTV design wins, including Breezeline. Completed the integration of MobiTV, now referred to as TiVo’s Managed IPTV service. Consumer Electronics business highlights: Launched IMAX Enhanced on LG Soundbars and Vestel TVs. Increased Sony Pictures IMAX Enhanced content offerings to more than 160 unique titles. Play-Fi wireless won multiple innovation awards, including being named a CES 2022 Innovation Awards Honoree. Connected Car business highlights: Toyota will include HD Radio as a standard feature across its entire next generation infotainment system in the U.S. Sixteen car companies are testing DTS AutoStage in Europe, North America and Asia; and multiple partners, including two major OEMs, are in advanced stages of testing. Achieved important industry A-SPICE certification for the DTS AutoSense driver monitoring solution. Media Platform business highlights: Continued to integrate content onto the TiVo platform, and added Discovery+, PBS, and CineLife to TiVo Stream 4K and TiVo+. TiVo Stream 4K now covers all major streaming services. Released “Video Price-Based Auction” solution for TiVo’s CTV ad inventory, driving increasing fill rates. Environment Social & Governance (ESG) Earlier this month, the Company published its first annual ESG report. During 2021, Xperi leadership met with employees across its global workforce and through thoughtful, candid conversations on diversity, equity, inclusion, and its environmental footprint, completed a robust analysis to identify and prioritize the ESG issues material to the Company. The report can be found on the Company's website here: ESG Report. Capital Allocation During the quarter, the Company repurchased $25.1 million of common stock. On Dec. 20, 2021, the Company paid $5.2 million to stockholders of record on Nov. 29, 2021, for a quarterly cash dividend of $0.05 per share of common stock. On Feb. 3, 2022, the Board of Directors declared a dividend of $0.05 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022. Financial Outlook The Company’s full year 2022 outlook is as follows: Category GAAP Outlook Non-GAAP Outlook Revenue $910M to $950M $910M to $950M COGS $120M to $130M $120M to $130M Operating Expense excluding COGS* $725M to $755M $490M to $520M Interest Expense ~ $36M ~ $36M Other Income ~ $3M ~ $3M Cash Tax (net of refunds) $33M to $35M $33M to $35M Basic Shares Outstanding 105M 105M Diluted Shares Outstanding 107M 113M Operating Cash Flow $200M to $230M $200M to $230M *See tables for reconciliation of GAAP to non-GAAP differences. Conference Call Information The Company will hold its fourth quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Wednesday, February 23, 2022. To access the call in the U.S., please dial 800-220-8451, and for international callers, dial +1 646-828-8193. The conference ID is 2746276. All participants should dial in at least 15 minutes prior to the start of the conference call. A presentation corresponding with the conference call will be available live and in PDF format and the Company suggests utilizing the webcast link to access the call at Q4 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. 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, 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; 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 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 (Adeia, DTS, HD Radio, IMAX Enhanced, 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, Adeia, DTS, IMAX Enhanced, 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. XPER-E XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31,2021 December 31,2020 December 31,2021 December 31,2020 Revenue $ 214,449 $433,927 $ 877,696 $ 892,020 Operating expenses: Cost of revenue, excluding depreciation and amortization of intangible assets 39,194 33,023 126,758 78,357 Research, development and other related costs 63,828 70,589 232,197 195,154 Selling, general and administrative 68,331 76,770 266,085 245,356 Depreciation expense 5,807 6,103 23,801 17,918 Amortization expense 46,576 51,379 203,401 156,826 Litigation expense 4,480 6,281 11,642 20,782 Total operating expenses 228,216 244,145 863,884 714,393 Operating income (loss) (13,767 ) 189,782 13,812 177,627 Interest expense (8,573 ) (13,271 ) (38,973 ) (37,873 ) Other income and expense, net (278 ) 1,007 2,638 4,455 Loss on debt extinguishment — — (8,012 ) (8,300 ) Income (loss) before taxes (22,618 ) 177,518 (30,535 ) 135,909 Provision for (benefit from) income taxes (7,429 ) (1,126 ) 28,378 (7,887 ) Net income (loss) $ (15,189 ) $ 178,644 $ (58,913 ) $ 143,796 Less: net loss attributable to noncontrolling interest (630 ) (1,147 ) (3,456 ) (2,966 ) Net income (loss) attributable to the Company $ (14,559 ) $ 179,791 $ (55,457 ) $ 146,762 Income (loss) per share attributable to the Company: Basic $ (0.14 ) $ 1.70 $ (0.53 ) $ 1.77 Diluted $ (0.14 ) $ 1.68 $ (0.53 ) $ 1.75 Weighted average number of shares used in per sharecalculations-basic 104,249 105,498 104,735 82,840 Weighted average number of shares used in per sharecalculations-diluted 104,249 106,907 104,735 83,856 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 201,121 $ 170,188 Available-for-sale debt securities 60,534 86,947 Accounts receivable, net 143,683 115,975 Unbilled contracts receivable, net 77,677 132,431 Other current assets 36,459 40,763 Total current assets 519,474 546,304 Long-term unbilled contracts receivable 4,107 6,761 Property and equipment, net 60,974 63,207 Operating lease right-of-use assets 68,498 80,226 Intangible assets, net 817,916 1,004,379 Goodwill 851,088 847,029 Other long-term assets 147,965 153,270 Total assets $ 2,470,022 $ 2,701,176 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 7,811 $ 13,045 Accrued legal fees 7,190 5,783 Accrued liabilities 103,515 129,035 Current portion of long-term debt, net 36,095 43,689 Deferred revenue 35,136 33,119 Total current liabilities 189,747 224,671 Deferred revenue, less current portion 37,107 39,775 Long-term deferred tax liabilities 19,848 24,754 Long-term debt, net 729,392 795,661 Noncurrent operating lease liabilities 54,658 66,243 Other long-term liabilities 98,842 98,953 Total liabilities 1,129,594 1,250,057 Commitments and contingencies Company stockholders’ equity: Preferred stock — — Common stock 113 110 Additional paid-in capital 1,340,480 1,268,471 Treasury stock at cost (178,022 ) (77,218 ) Accumulated other comprehensive income (loss) (752 ) 1,264 Retained earnings 187,814 264,250 Total Company stockholders’ equity 1,349,633 1,456,877 Noncontrolling interest (9,205 ) (5,758 ) Total equity 1,340,428 1,451,119 Total liabilities and equity $ 2,470,022 $ 2,701,176 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2021 December 31, 2020 Cash flows from operating activities: Net income (loss) $ (58,913 ) $ 143,796 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment 23,801 17,918 Amortization of intangible assets 203,401 156,826 Stock-based compensation expense 58,182 39,135 Deferred income taxes (978 ) (34,670 ) Loss on debt extinguishment 8,012 8,300 Patent assets received in lieu of cash (8,787 ) — Other 5,488 19,500 Changes in operating assets and liabilities: Accounts receivable (27,615 ) 7,091 Unbilled contracts receivable 58,496 76,262 Other assets 7,497 (41,948 ) Accounts payable (5,234 ) (4,863 ) Accrued and other liabilities (27,910 ) 21,692 Deferred revenue (651 ) 18,564 Net cash from operating activities 234,789 427,603 Cash flows from investing activities: Purchases of property and equipment (13,950 ) (7,379 ) Proceeds from sale of property and equipment 19 — Net cash received (paid) for mergers and acquisitions (17,400 ) 117,424 Purchases of intangible assets (186 ) (50,935 ) Purchases of short-term investments (67,343 ) (77,178 ) Proceeds from sales of investments 49,768 11,225 Proceeds from maturities of investments 42,886 24,683 Net cash from investing activities (6,206 ) 17,840 Cash flows from financing activities: Dividends paid (20,979 ) (30,829 ) Repayment of debt (84,048 ) (520,250 ) Debt refinancing costs (4,253 ) — 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 4,855 Repurchases of common stock (100,804 ) (80,589 ) Net cash from financing activities (196,245 ) (351,136 ) Effect of exchange rate changes on cash and cash equivalents (1,405 ) 1,330 Net increase in cash and cash equivalents 30,933 95,637 Cash and cash equivalents at beginning of period 170,188 74,551 Cash and cash equivalents at end of period $ 201,121 $ 170,188 Supplemental disclosure of cash flow information: Interest paid $ 32,363 $ 31,240 Income taxes paid, net of refunds $ 30,865 $ 43,066 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 Twelve Months Ended December 31, 2021 December 31, 2021 GAAP net loss attributable to the Company $ (14,559 ) $ (55,457 ) Adjustments to GAAP net loss attributable to the Company: Stock-based compensation expense: Cost of revenue 595 1,972 Research, development and other 5,566 19,833 Selling, general and administrative 9,553 36,377 Amortization expense 46,576 203,401 Merger and integration-related costs: Transaction and other related costs recorded in selling, general and administrative 52 1,647 Severance and retention recorded in cost of revenue, excluding depreciation and amortization of intangible assets 53 849 Severance and retention recorded in research, development and other 142 2,681 Severance and retention recorded in selling, general and administrative 15 3,375 Separation costs recorded in selling, general and administrative 2,030 7,596 Gain from lease restructuring recorded in selling, general and administrative — (818 ) Loss on debt extinguishment — 8,012 Expensed debt refinancing costs — 2,590 Cash taxes paid in excess of tax provision/benefit recorded (16,143 ) (2,487 ) Non-GAAP net income attributable to the Company $ 33,880 $ 229,571 Diluted earnings per share attributable to the Company: Three Months Ended Twelve Months Ended December 31, 2021 December 31, 2021 GAAP diluted loss per share attributable to the Company $ (0.14 ) $ (0.53 ) Adjustments to GAAP diluted loss per share attributable to the Company: Stock-based compensation expense 0.15 0.56 Amortization expense 0.45 1.94 Merger and integration-related costs — 0.08 Separation costs 0.02 0.07 Gain from lease restructuring recorded — (0.01 ) Loss on debt extinguishment — 0.08 Expensed debt refinancing costs — 0.02 Difference in shares used in the calculation (0.02 ) (0.16 ) Cash taxes paid in excess of tax provision/benefit recorded (0.16 ) (0.02 ) Non-GAAP diluted earnings per share attributable to the Company $ 0.30 $ 2.03 Weighted average number of shares used in per share calculations excluding the effects of stock-based compensation - diluted 112,518 112,894 XPERI HOLDING CORPORATION RECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW (in thousands) (unaudited) Three Months Ended December 31, 2021 Cash flow from operations $ 68,876 Adjustments to cash flow from operations: Purchases of property & equipment (5,652 ) Merger and integration costs 52 Separation-related costs 2,030 Adjusted free cash flow $ 65,306 XPERI HOLDING CORPORATION RECONCILIATION FOR GUIDANCE ON GAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS (in millions) (unaudited) Twelve Months Ended December 31, 2022 Low High GAAP operating expense excluding COGS $ 725.0 $ 755.0 Stock-based compensation -- R&D (23.0 ) (23.0 ) Stock-based compensation -- SG&A (39.0 ) (39.0 ) Merger, integration and separation-related expense -- SG&A (15.0 ) (15.0 ) Amortization expense (158.0 ) (158.0 ) Total of non-GAAP adjustments (235.0 ) (235.0 ) Non-GAAP operating expense excluding COGS $ 490.0 $ 520.0 View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006039/en/Contacts Xperi Investor Contact: Geri Weinfeld, Vice President of Investor Relations +1 818-436-1231 geri.weinfeld@xperi.com Xperi Media Contact: Amy Brennan, Senior Director, Corporate Communications +1 949-518-6846 amy.brennan@xperi.com
Xperi Holding Corporation (Nasdaq: XPER) (the “Company”, “Xperi” or “we”) today announced financial results for the fourth quarter ended Dec. 31, 2021. “Our fourth quarter performance was solid, and we finished the year with revenue around the mid-point of our guidance and earnings above expectations. I’m proud of how our team has navigated the shifting pandemic challenges to position the Company for success,” said Jon Kirchner, chief executive officer of Xperi. “Importantly, we continued to successfully deliver against the key strategic objectives we set following our merger with TiVo nearly two years ago. To that end, we are thrilled to announce a new agreement with Micron, a strong indicator of the industry’s continued move toward hybrid bonding as a key enabling technology.” Fourth Quarter 2021 Financial Highlights: Revenue of $214.4 million for the quarter, compared to $433.9 million for Q4 2020, which included prior period revenue from the Comcast agreement. Quarterly revenue was up more than 2% excluding prior period Comcast revenue. GAAP loss per share of $(0.14) and non-GAAP earnings per share of $0.30. Cash Flow from Operations of $68.9 million. Adjusted Free Cash Flow1 of $65.3 million. Repurchased $25.1 million of common stock. 1Adjusted 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. Full Year 2021 Financial Highlights: Revenue of $877.7 million for the full year 2021. GAAP loss per share of $(0.53) and non-GAAP earnings per share of $2.03. Cash Flow from Operations of $234.8 million. Returned over $100 million to stockholders through dividends and share repurchases. Fourth Quarter 2021 Business and Recent Operating Highlights: IP Licensing Business (Revenue: $89.7 million) Increased go-forward average annual revenue baseline from $350 million to $375 million. Entered into a new multi-year license agreement with Micron Technology, Inc., which covers our hybrid bonding IP. Launched new brand for the IP licensing business, “Adeia.” Product Business (Revenue: $124.7 million) Pay-TV business highlights: IPTV subscribers grew organically by more than 5 times year-over-year. Added several new operator IPTV design wins, including Breezeline. Completed the integration of MobiTV, now referred to as TiVo’s Managed IPTV service. Consumer Electronics business highlights: Launched IMAX Enhanced on LG Soundbars and Vestel TVs. Increased Sony Pictures IMAX Enhanced content offerings to more than 160 unique titles. Play-Fi wireless won multiple innovation awards, including being named a CES 2022 Innovation Awards Honoree. Connected Car business highlights: Toyota will include HD Radio as a standard feature across its entire next generation infotainment system in the U.S. Sixteen car companies are testing DTS AutoStage in Europe, North America and Asia; and multiple partners, including two major OEMs, are in advanced stages of testing. Achieved important industry A-SPICE certification for the DTS AutoSense driver monitoring solution. Media Platform business highlights: Continued to integrate content onto the TiVo platform, and added Discovery+, PBS, and CineLife to TiVo Stream 4K and TiVo+. TiVo Stream 4K now covers all major streaming services. Released “Video Price-Based Auction” solution for TiVo’s CTV ad inventory, driving increasing fill rates. Environment Social & Governance (ESG) Earlier this month, the Company published its first annual ESG report. During 2021, Xperi leadership met with employees across its global workforce and through thoughtful, candid conversations on diversity, equity, inclusion, and its environmental footprint, completed a robust analysis to identify and prioritize the ESG issues material to the Company. The report can be found on the Company's website here: ESG Report. Capital Allocation During the quarter, the Company repurchased $25.1 million of common stock. On Dec. 20, 2021, the Company paid $5.2 million to stockholders of record on Nov. 29, 2021, for a quarterly cash dividend of $0.05 per share of common stock. On Feb. 3, 2022, the Board of Directors declared a dividend of $0.05 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022. Financial Outlook The Company’s full year 2022 outlook is as follows: Category GAAP Outlook Non-GAAP Outlook Revenue $910M to $950M $910M to $950M COGS $120M to $130M $120M to $130M Operating Expense excluding COGS* $725M to $755M $490M to $520M Interest Expense ~ $36M ~ $36M Other Income ~ $3M ~ $3M Cash Tax (net of refunds) $33M to $35M $33M to $35M Basic Shares Outstanding 105M 105M Diluted Shares Outstanding 107M 113M Operating Cash Flow $200M to $230M $200M to $230M *See tables for reconciliation of GAAP to non-GAAP differences. Conference Call Information The Company will hold its fourth quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Wednesday, February 23, 2022. To access the call in the U.S., please dial 800-220-8451, and for international callers, dial +1 646-828-8193. The conference ID is 2746276. All participants should dial in at least 15 minutes prior to the start of the conference call. A presentation corresponding with the conference call will be available live and in PDF format and the Company suggests utilizing the webcast link to access the call at Q4 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. 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, 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; 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 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 (Adeia, DTS, HD Radio, IMAX Enhanced, 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, Adeia, DTS, IMAX Enhanced, 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. XPER-E XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Twelve Months Ended December 31,2021 December 31,2020 December 31,2021 December 31,2020 Revenue $ 214,449 $433,927 $ 877,696 $ 892,020 Operating expenses: Cost of revenue, excluding depreciation and amortization of intangible assets 39,194 33,023 126,758 78,357 Research, development and other related costs 63,828 70,589 232,197 195,154 Selling, general and administrative 68,331 76,770 266,085 245,356 Depreciation expense 5,807 6,103 23,801 17,918 Amortization expense 46,576 51,379 203,401 156,826 Litigation expense 4,480 6,281 11,642 20,782 Total operating expenses 228,216 244,145 863,884 714,393 Operating income (loss) (13,767 ) 189,782 13,812 177,627 Interest expense (8,573 ) (13,271 ) (38,973 ) (37,873 ) Other income and expense, net (278 ) 1,007 2,638 4,455 Loss on debt extinguishment — — (8,012 ) (8,300 ) Income (loss) before taxes (22,618 ) 177,518 (30,535 ) 135,909 Provision for (benefit from) income taxes (7,429 ) (1,126 ) 28,378 (7,887 ) Net income (loss) $ (15,189 ) $ 178,644 $ (58,913 ) $ 143,796 Less: net loss attributable to noncontrolling interest (630 ) (1,147 ) (3,456 ) (2,966 ) Net income (loss) attributable to the Company $ (14,559 ) $ 179,791 $ (55,457 ) $ 146,762 Income (loss) per share attributable to the Company: Basic $ (0.14 ) $ 1.70 $ (0.53 ) $ 1.77 Diluted $ (0.14 ) $ 1.68 $ (0.53 ) $ 1.75 Weighted average number of shares used in per sharecalculations-basic 104,249 105,498 104,735 82,840 Weighted average number of shares used in per sharecalculations-diluted 104,249 106,907 104,735 83,856 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 201,121 $ 170,188 Available-for-sale debt securities 60,534 86,947 Accounts receivable, net 143,683 115,975 Unbilled contracts receivable, net 77,677 132,431 Other current assets 36,459 40,763 Total current assets 519,474 546,304 Long-term unbilled contracts receivable 4,107 6,761 Property and equipment, net 60,974 63,207 Operating lease right-of-use assets 68,498 80,226 Intangible assets, net 817,916 1,004,379 Goodwill 851,088 847,029 Other long-term assets 147,965 153,270 Total assets $ 2,470,022 $ 2,701,176 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 7,811 $ 13,045 Accrued legal fees 7,190 5,783 Accrued liabilities 103,515 129,035 Current portion of long-term debt, net 36,095 43,689 Deferred revenue 35,136 33,119 Total current liabilities 189,747 224,671 Deferred revenue, less current portion 37,107 39,775 Long-term deferred tax liabilities 19,848 24,754 Long-term debt, net 729,392 795,661 Noncurrent operating lease liabilities 54,658 66,243 Other long-term liabilities 98,842 98,953 Total liabilities 1,129,594 1,250,057 Commitments and contingencies Company stockholders’ equity: Preferred stock — — Common stock 113 110 Additional paid-in capital 1,340,480 1,268,471 Treasury stock at cost (178,022 ) (77,218 ) Accumulated other comprehensive income (loss) (752 ) 1,264 Retained earnings 187,814 264,250 Total Company stockholders’ equity 1,349,633 1,456,877 Noncontrolling interest (9,205 ) (5,758 ) Total equity 1,340,428 1,451,119 Total liabilities and equity $ 2,470,022 $ 2,701,176 XPERI HOLDING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Twelve Months Ended December 31, 2021 December 31, 2020 Cash flows from operating activities: Net income (loss) $ (58,913 ) $ 143,796 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment 23,801 17,918 Amortization of intangible assets 203,401 156,826 Stock-based compensation expense 58,182 39,135 Deferred income taxes (978 ) (34,670 ) Loss on debt extinguishment 8,012 8,300 Patent assets received in lieu of cash (8,787 ) — Other 5,488 19,500 Changes in operating assets and liabilities: Accounts receivable (27,615 ) 7,091 Unbilled contracts receivable 58,496 76,262 Other assets 7,497 (41,948 ) Accounts payable (5,234 ) (4,863 ) Accrued and other liabilities (27,910 ) 21,692 Deferred revenue (651 ) 18,564 Net cash from operating activities 234,789 427,603 Cash flows from investing activities: Purchases of property and equipment (13,950 ) (7,379 ) Proceeds from sale of property and equipment 19 — Net cash received (paid) for mergers and acquisitions (17,400 ) 117,424 Purchases of intangible assets (186 ) (50,935 ) Purchases of short-term investments (67,343 ) (77,178 ) Proceeds from sales of investments 49,768 11,225 Proceeds from maturities of investments 42,886 24,683 Net cash from investing activities (6,206 ) 17,840 Cash flows from financing activities: Dividends paid (20,979 ) (30,829 ) Repayment of debt (84,048 ) (520,250 ) Debt refinancing costs (4,253 ) — 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 4,855 Repurchases of common stock (100,804 ) (80,589 ) Net cash from financing activities (196,245 ) (351,136 ) Effect of exchange rate changes on cash and cash equivalents (1,405 ) 1,330 Net increase in cash and cash equivalents 30,933 95,637 Cash and cash equivalents at beginning of period 170,188 74,551 Cash and cash equivalents at end of period $ 201,121 $ 170,188 Supplemental disclosure of cash flow information: Interest paid $ 32,363 $ 31,240 Income taxes paid, net of refunds $ 30,865 $ 43,066 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 Twelve Months Ended December 31, 2021 December 31, 2021 GAAP net loss attributable to the Company $ (14,559 ) $ (55,457 ) Adjustments to GAAP net loss attributable to the Company: Stock-based compensation expense: Cost of revenue 595 1,972 Research, development and other 5,566 19,833 Selling, general and administrative 9,553 36,377 Amortization expense 46,576 203,401 Merger and integration-related costs: Transaction and other related costs recorded in selling, general and administrative 52 1,647 Severance and retention recorded in cost of revenue, excluding depreciation and amortization of intangible assets 53 849 Severance and retention recorded in research, development and other 142 2,681 Severance and retention recorded in selling, general and administrative 15 3,375 Separation costs recorded in selling, general and administrative 2,030 7,596 Gain from lease restructuring recorded in selling, general and administrative — (818 ) Loss on debt extinguishment — 8,012 Expensed debt refinancing costs — 2,590 Cash taxes paid in excess of tax provision/benefit recorded (16,143 ) (2,487 ) Non-GAAP net income attributable to the Company $ 33,880 $ 229,571 Diluted earnings per share attributable to the Company: Three Months Ended Twelve Months Ended December 31, 2021 December 31, 2021 GAAP diluted loss per share attributable to the Company $ (0.14 ) $ (0.53 ) Adjustments to GAAP diluted loss per share attributable to the Company: Stock-based compensation expense 0.15 0.56 Amortization expense 0.45 1.94 Merger and integration-related costs — 0.08 Separation costs 0.02 0.07 Gain from lease restructuring recorded — (0.01 ) Loss on debt extinguishment — 0.08 Expensed debt refinancing costs — 0.02 Difference in shares used in the calculation (0.02 ) (0.16 ) Cash taxes paid in excess of tax provision/benefit recorded (0.16 ) (0.02 ) Non-GAAP diluted earnings per share attributable to the Company $ 0.30 $ 2.03 Weighted average number of shares used in per share calculations excluding the effects of stock-based compensation - diluted 112,518 112,894 XPERI HOLDING CORPORATION RECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW (in thousands) (unaudited) Three Months Ended December 31, 2021 Cash flow from operations $ 68,876 Adjustments to cash flow from operations: Purchases of property & equipment (5,652 ) Merger and integration costs 52 Separation-related costs 2,030 Adjusted free cash flow $ 65,306 XPERI HOLDING CORPORATION RECONCILIATION FOR GUIDANCE ON GAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS (in millions) (unaudited) Twelve Months Ended December 31, 2022 Low High GAAP operating expense excluding COGS $ 725.0 $ 755.0 Stock-based compensation -- R&D (23.0 ) (23.0 ) Stock-based compensation -- SG&A (39.0 ) (39.0 ) Merger, integration and separation-related expense -- SG&A (15.0 ) (15.0 ) Amortization expense (158.0 ) (158.0 ) Total of non-GAAP adjustments (235.0 ) (235.0 ) Non-GAAP operating expense excluding COGS $ 490.0 $ 520.0 View source version on businesswire.com: https://www.businesswire.com/news/home/20220223006039/en/
Xperi Investor Contact: Geri Weinfeld, Vice President of Investor Relations +1 818-436-1231 geri.weinfeld@xperi.com Xperi Media Contact: Amy Brennan, Senior Director, Corporate Communications +1 949-518-6846 amy.brennan@xperi.com
