Xperi (XPER) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2021 was $222.3 million, down 4.7% year-over-year, primarily due to declines in semi IP and Pay-TV product business, partially offset by growth in media IP, Connected Car, and Consumer Experience markets [9][10] - Operating cash flow was$ 56.3 million, and adjusted free cash flow was $56.7 million, with$ 51 million of debt paid down and $10 million used for stock buybacks [10][30] - Non-GAAP earnings per share for Q2 was$ 0.61, with 104.9 million basic shares outstanding [28] Business Line Data and Key Metrics Changes - IP licensing revenue was $101.8 million, with media IP revenue up more than 40% year-over-year, driven by Comcast license and renewals [12] - Total product revenue was$ 120.4 million, up 6% year-over-year, with Consumer Experience revenue at $46.9 million, up 12% year-over-year, driven by TiVo Stream 4K sales [17] - Connected Car revenue was$ 19.5 million, up 53% year-over-year, with 15 new models launched featuring HD Radio technology [20] Market Data and Key Metrics Changes - Pay-TV revenue was $54 million, down 9% year-over-year, primarily due to subscriber churn [22] - The company continues to see strong subscriber growth for its IPTV service, which grew close to 100% quarter-over-quarter [23] Company Strategy and Development Direction - The company is focused on expanding its IP business, particularly in the OTT area, and has made significant progress in licensing agreements with major players like Google and Fox [13][16] - The acquisition of MobiTV is expected to accelerate IPTV conversions and profitable revenue growth, expanding the addressable market [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exceeding the$ 350 million average annual baseline for IP revenue this year, with over $100 million of annual IP revenue coming from outside traditional U.S. Pay-TV [16] - The company reaffirmed its revenue outlook for the year at$ 860 million to $900 million, considering the impact of semiconductor supply constraints [31] Other Important Information - The company has engaged with 20 OEMs for its Connected Car products and is preparing for the launch of AutoSense with BMW [21] - The company is monitoring the semiconductor supply situation and its potential impact on customer go-to-market plans [24] Q&A Session Summary Question: What are the efforts regarding OTT license renewals and new licenses? - Management indicated a strong pipeline of opportunities for renewals and new licensing in the OTT area, with updates to be provided as progress is made [37][39] Question: Can you discuss MobiTV's customer diversification? - The customer base for MobiTV is largely U.S. centric, with around 100 different customers, and the company aims to leverage this for aggressive IPTV growth [40] Question: Will the drop in hardware COGS be a new level going forward? - Management expects COGS to increase in the second half due to timing of expenses and the MobiTV acquisition [41][42]