false000180369600018036962022-08-082022-08-08

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): August 8, 2022

 

XPERI HOLDING CORPORATION

(Exact name of Registrant as Specified in its Charter)

 

Delaware		001-39304		84-4734590
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

3025 Orchard Parkway

San Jose, California 95134

(Address of Principal Executive Offices, including Zip Code)

(408) 321-6000

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (par value $0.001 per share)	XPER	Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On August 8, 2022, Xperi Holding Corporation (the “Company”) announced its financial results for the second quarter ended June 30, 2022. A copy of the Company’s press release announcing these financial results and other information regarding its financial condition is attached hereto as Exhibit 99.1 to this Form 8-K.

The information in Item 2.02 of this report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press Release dated August 8, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 8, 2022			Xperi HOLDING corporation
			By:		/s/ Robert Andersen
			Name:		Robert Andersen
			Title:		Chief Financial Officer

 

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Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

XPERI HOLDING CORPORATION announces SECOND quarter 2022 Results

 

Company achieved significant milestones on growth strategy

Tax free separation into two companies expected in the fall

 

San Jose, Calif. (August 8, 2022) – Xperi Holding Corporation (NASDAQ: XPER) (the “Company”, “Xperi” or “we”) today announced financial results for the second quarter ended June 30, 2022.

 

“We are excited with the progress we made against our strategic initiatives across the business,” said Jon Kirchner, chief executive officer of Xperi. “During the quarter, we signed key license agreements in our IP business and appointed Paul Davis as president of Adeia. In our Product business, we saw accelerating engagement and design wins in automotive, signed our first TV customer for TiVo OS, and further advanced our TV OS market position with the acquisition of Vewd. With its leading European media platform, Vewd gives Xperi access to an installed footprint of approximately 15 million devices that can be enabled for monetization and advances our growth strategy in the TV space as we prepare for separation and operation as a stand-alone product company.”

 

“Our IP business had a strong second quarter, highlighted by the signing of a long-term renewal with a leading consumer electronics and OTT service provider for both our media and semiconductor IP portfolios. The transaction demonstrates the strength of our combined IP business and the increasing relevance of our portfolio beyond traditional Pay-TV” said Paul Davis, president of Adeia. “We are also thrilled to have Keith Jones join as Adeia’s chief financial officer. Keith’s industry knowledge, expertise, and leadership are a great fit for Adeia. The expansion of the management team and the strong business momentum in the first half position Adeia well for the upcoming separation this fall.”

 

 

Second Quarter 2022 Financial Highlights:

 

 

 

Second Quarter 2022 Business and Recent Operating Highlights:

 

IP Licensing Business

 

 

Product Business

 

 

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Capital Allocation

On June 21, 2022, the Company distributed $5.2 million to stockholders of record on May 31, 2022, for a quarterly cash dividend of $0.05 per share of common stock.

On July 29, 2022, the Board of Directors declared a dividend of $0.05 per share, payable on September 19, 2022, to stockholders of record on August 29, 2022.

 

Financial Outlook

 

Primarily to reflect the recent acquisition of Vewd, the Company is updating its full year 2022 outlook. Specifically, the Company is increasing the low end of the revenue range, increasing operating expenses, and lowering the high end of the operating cash flow range. The Company is also adjusting its interest expense and cash tax outlook. Updated guidance numbers are shown in the table below.

 

Category (in millions)		Prior GAAP Outlook		Updated GAAP Outlook		Prior Non-GAAP Outlook		Updated Non-GAAP Outlook
Revenue		$920 -- 960		$930 -- 960		$920 -- 960		$930 -- 960
Cost of revenue, excluding depreciation and amortization of intangible assets		$120 -- 130		$120 -- 130		$120 -- 130		$120 -- 130
Adjusted Operating Expenses1		$725 -- 755		$755 -- 775		$490 -- 520		$510 -- 530
Total Operating Expenses2		$845 -- 885		$875 -- 905		$610 -- 650		$630 -- 660
Interest Expense		~ $36		~ $44		~ $36		~ $44
Other Income		~ $3		~ $3		~ $3		~ $3
Cash Tax		$33 -- 35		$30 -- 33		$33 -- 35		$30 -- 33
Basic Shares Outstanding		105		105		105		105
Diluted Shares Outstanding2		107		107		113		113
Operating Cash Flow		$210 -- 240		$210 -- 230		$210 -- 240		$210 -- 230

1Defined as total operating expenses less cost of revenue, excluding depreciation and amortization of intangible assets. See tables for reconciliation of GAAP to Non-GAAP differences.

2See tables for reconciliation of GAAP to Non-GAAP differences.

Change in Non-GAAP EPS Calculation

Beginning this quarter, to conform more closely with standard practices for non-GAAP measures, the Company will no longer use cash tax to calculate non-GAAP EPS. Instead, the Company will adjust GAAP income tax to reflect the net direct and indirect income tax effects of the various non-GAAP pretax adjustments. Non-GAAP tax for the remainder of fiscal year 2022 is estimated to be approximately 13% of non-GAAP profit before tax.

Conference Call Information

The Company will hold its second quarter 2022 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Monday, August 8, 2022. To access the call in the U.S., please dial 888-394-8218, and for international callers, dial +1 646-828-8193. The conference ID is 9128537. All participants should dial in 15 minutes prior to the start of the conference call and can use the conference ID to access the call. The Company also suggests utilizing the webcast link to access the call at Q2 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, business outlook, the anticipated business separation timing, and the expected launch dates of TiVo OS and single camera OMS in-car safety feature. 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. 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

 

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cause such a difference include, but are not limited to: anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenue, cost savings, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business strategies, and expansion and growth of the Company’s businesses; the Company’s ability to implement its business strategy; pricing trends, including the Company’s ability to achieve economies of scale; the ability of the Company to retain and hire key personnel; uncertainty as to the long-term value of the Company’s common stock; legislative, regulatory and economic developments affecting the Company’s business; general economic and market developments and conditions; 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, including Russia’s invasion of Ukraine, 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 the planned separation of the Company’s IP and Product businesses. 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.

 

Xperi Investor Contact:

Jill Koval, Arbor Advisory Group

+1 203-832-4449

ir@xperi.com

 

Media Contact:

Amy Brennan, Senior Director, Corporate Communications

+1 949-518-6846

amy.brennan@xperi.com

 

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– Tables Follow –

SOURCE: XPERI HOLDING CORP

XPER-E

# # #

 

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XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

		Three Months Ended								Six Months Ended
		June 30, 2022				June 30, 2021				June 30, 2022				June 30, 2021
Revenue		$	234,018			$	222,272			$	491,438			$	443,868
Operating expenses:
Cost of revenue, excluding depreciation and amortization of intangible assets			27,074				26,884				54,771				55,014
Research, development and other related costs			62,145				54,408				121,515				109,603
Selling, general and administrative			72,116				67,668				142,562				135,128
Depreciation expense			5,505				5,514				11,371				11,198
Amortization expense			39,166				52,242				78,485				104,437
Litigation expense			3,161				2,302				4,914				4,835
Total operating expenses			209,167				209,018				413,618				420,215
Operating income			24,851				13,254				77,820				23,653
Interest expense			(9,440	)			(10,555	)			(17,868	)			(21,868	)
Other income, net			254				564				1,221				1,989
Loss on debt extinguishment			—				(8,012	)			—				(8,012	)
Income (loss) before taxes			15,665				(4,749	)			61,173				(4,238	)
Provision for (benefit from) income taxes			22,138				(2,876	)			43,670				(6,891	)
Net income (loss)		$	(6,473	)		$	(1,873	)		$	17,503			$	2,653
Less: net loss attributable to noncontrolling interest			(848	)			(755	)			(1,816	)			(1,516	)
Net income (loss) attributable to the Company		$	(5,625	)		$	(1,118	)		$	19,319			$	4,169
Income (loss) per share attributable to the Company:
Basic		$	(0.05	)		$	(0.01	)		$	0.19			$	0.04
Diluted		$	(0.05	)		$	(0.01	)		$	0.18			$	0.04
Weighted average number of shares used in per share    calculations-basic			104,001				104,906				103,841				104,923
Weighted average number of shares used in per share    calculations-diluted			104,001				104,906				105,362				107,667

 

 

 

 

 

 

 

 

 

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XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

		June 30,				December 31,
		2022				2021
ASSETS
Current assets:
Cash and cash equivalents		$	275,319			$	201,121
Available-for-sale debt securities			10,495				60,534
Accounts receivable, net			128,979				143,683
Unbilled contracts receivable, net			121,704				77,677
Other current assets			41,258				36,459
Total current assets			577,755				519,474
Long-term unbilled contracts receivable			43,021				4,107
Property and equipment, net			58,096				60,974
Operating lease right-of-use assets			62,149				68,498
Intangible assets, net			739,354				817,916
Goodwill			850,100				851,088
Other long-term assets			150,826				147,965
Total assets		$	2,481,301			$	2,470,022
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	14,679			$	7,811
Accrued liabilities			116,007				110,705
Current portion of long-term debt, net			36,210				36,095
Deferred revenue			44,003				35,136
Total current liabilities			210,899				189,747
Deferred revenue, less current portion			32,153				37,107
Long-term deferred tax liabilities			18,227				19,848
Long-term debt, net			711,259				729,392
Noncurrent operating lease liabilities			48,452				54,658
Other long-term liabilities			104,086				98,842
Total liabilities			1,125,076				1,129,594
Commitments and contingencies
Company stockholders’ equity:
Preferred stock			—				—
Common stock			116				113
Additional paid-in capital			1,380,814				1,340,480
Treasury stock at cost			(206,757	)			(178,022	)
Accumulated other comprehensive loss			(3,648	)			(752	)
Retained earnings			196,715				187,814
Total Company stockholders’ equity			1,367,240				1,349,633
Noncontrolling interest			(11,015	)			(9,205	)
Total equity			1,356,225				1,340,428
Total liabilities and equity		$	2,481,301			$	2,470,022

 

 

 

 

 

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XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Six Months Ended
		June 30, 2022				June 30, 2021
Cash flows from operating activities:
Net income		$	17,503			$	2,653
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of property and equipment			11,371				11,198
Amortization of intangible assets			78,485				104,437
Stock-based compensation expense			32,284				28,054
Deferred income taxes			(1,641	)			(1,796	)
Loss on debt extinguishment			—				8,012
Other			3,148				8,289
Changes in operating assets and liabilities:
Accounts receivable			14,820				(9,260	)
Unbilled contracts receivable			(82,767	)			5,978
Other assets			(1,291	)			(24,096	)
Accounts payable			6,868				1,307
Accrued and other liabilities			4,340				(44,096	)
Deferred revenue			3,913				(7,701	)
Net cash from operating activities			87,033				82,979
Cash flows from investing activities:
Purchases of property and equipment			(8,870	)			(4,858	)
Proceeds from sale of property and equipment			86				19
Net cash paid for acquisitions			—				(17,400	)
Purchases of intangible assets			(233	)			(92	)
Purchases of short-term investments			(4,490	)			(45,755	)
Proceeds from sales of investments			28,254				44,321
Proceeds from maturities of investments			26,053				17,550
Net cash from investing activities			40,800				(6,215	)
Cash flows from financing activities:
Dividends paid			(10,418	)			(10,514	)
Repayment of debt			(20,250	)			(63,750	)
Proceeds from debt, net of debt discount and issuance costs			—				(6,843	)
Proceeds from employee stock purchase program and exercise of stock options			8,059				7,247
Repurchases of common stock			(28,735	)			(43,324	)
Net cash from financing activities			(51,344	)			(117,184	)
Effect of exchange rate changes on cash and cash equivalents			(2,291	)			(808	)
Net increase (decrease) in cash and cash equivalents			74,198				(41,228	)
Cash and cash equivalents at beginning of period			201,121				170,188
Cash and cash equivalents at end of period		$	275,319			$	128,960
Supplemental disclosure of cash flow information:
Interest paid		$	15,590			$	17,677
Income taxes paid, net of refunds		$	13,400			$	14,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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XPERI HOLDING CORPORATION

GAAP TO NON-GAAP RECONCILIATIONS

(in thousands, except per share amounts)

(unaudited)

 

Net income attributable to the Company:
		Three Months Ended
		June 30, 2022
GAAP net loss attributable to the Company		$	(5,625	)
Adjustments to GAAP net loss attributable to the Company:
Stock-based compensation expense:
Cost of revenue			773
Research, development and other			6,074
Selling, general and administrative			8,634
Amortization expense			39,166
Merger and integration-related costs:
Transaction and other related costs recorded in selling, general and administrative			1,873
Severance and retention recorded in cost of revenue, excluding depreciation and amortization of intangible assets			(38	)
Severance and retention recorded in research, development and other			(178	)
Severance and retention recorded in selling, general and administrative			(63	)
Separation costs recorded in selling, general and administrative			3,032
Non-GAAP tax adjustment (1)			5,800
Non-GAAP net income attributable to the Company		$	59,448
Diluted earnings per share attributable to the Company:
		Three Months Ended
		June 30, 2022
GAAP diluted loss per share attributable to the Company		$	(0.05	)
Adjustments to GAAP diluted loss per share attributable to the Company:
Stock-based compensation expense			0.15
Amortization expense			0.38
Merger and integration-related costs			0.01
Separation costs			0.03
Difference in shares used in the calculation			(0.05	)
Non-GAAP tax adjustment			0.05
Non-GAAP diluted earnings per share attributable to the Company			0.52
GAAP weighted average number of shares-diluted			104,001
Non-GAAP adjustment (2)			9,759
Non-GAAP weighted average number of shares-diluted			113,760

 

(1) The provision for income taxes is adjusted to reflect the net direct and indirect income tax effects of the various non-GAAP pretax adjustments.

(2) The number of shares used in the diluted per share calculations on a non-GAAP basis excludes the impact of stock-based compensation expense expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.

 

 

 

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XPERI HOLDING CORPORATION

RECONCILIATION FOR GUIDANCE ON

GAAP TO NON-GAAP ADJUSTED OPERATING EXPENSES

(in millions)

(unaudited)

 

		Twelve Months Ended
		December 31, 2022
		Low				High
GAAP adjusted operating expense		$	755.0			$	775.0
Stock-based compensation -- R&D			(27.0	)			(27.0	)
Stock-based compensation -- SG&A			(40.0	)			(40.0	)
Merger, integration and separation-related expense -- SG&A			(22.0	)			(22.0	)
Amortization expense			(156.0	)			(156.0	)
Total of non-GAAP adjustments			(245.0	)			(245.0	)
Non-GAAP adjusted operating expense		$	510.0			$	530.0

 

 

XPERI HOLDING CORPORATION

RECONCILIATION FOR GUIDANCE ON

GAAP TO NON-GAAP TOTAL OPERATING EXPENSES

(in millions)

(unaudited)

 

		Twelve Months Ended
		December 31, 2022
		Low				High
GAAP total operating expenses		$	875.0			$	905.0
Stock-based compensation -- R&D			(27.0	)			(27.0	)
Stock-based compensation -- SG&A			(40.0	)			(40.0	)
Merger, integration and separation-related expense -- SG&A			(22.0	)			(22.0	)
Amortization expense			(156.0	)			(156.0	)
Total of non-GAAP adjustments			(245.0	)			(245.0	)
Non-GAAP total operating expenses		$	630.0			$	660.0

 

 

 

 

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