Good day, everyone. Thank you for standing by. Welcome to Xperi First Quarter 2023 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the call will be open for questions. I would now like to turn the call over to Mike Iburg, Xperi's Head of Investor Relations. Mike, please go ahead.

Good afternoon. And thank you for joining us as Xperi reports its first quarter 2023 financial results. With me on today’s call are Jon Kirchner, Chief Executive Officer; and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation, which can be accessed along with this webcast on our Investor Relations website at investor.xperi.com. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same quarter in the prior year. In addition, the first quarter of 2022 was calculated on a carve-out basis prior to our separation from Xperi Holding Corporation on October 1, 2022. Xperi Holding Corporation is now known as Adeia Inc. Second, today's discussion contains forward-looking statements that are predictions, projections, and other statements about future events which are based on management's current expectations and beliefs and therefore, subject to risks, uncertainties, and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discuss today, please refer to the Risk Factors and MD&A section in our SEC filings, including our most recent Form 10-K. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to the most directly comparable GAAP measures, found in the Investor Relations section on our website. Lastly, a replay of this conference call will be available on our website shortly after the conclusion of this call. I will now turn the call over to Xperi's CEO, Jon Kirchner.

Thank you, Mike, and thank you, everyone, for joining us on our first quarter 2023 earnings call. We are pleased to deliver another quarter of significant business progress and solid financial results for Q1 of 2023. With these accomplishments, we remain on track to achieve our full-year outlook and long-term strategic objectives. Revenue in the quarter was $127 million, an increase of 7% from the prior year. We expanded our gross margin, sequentially reduced our operating expenses, and significantly increased our adjusted EBITDA from the year-ago period. I'll let Robert walk you through the details in just a moment. In addition to a strong quarter for consumer electronics, we continue to achieve major milestones in each of our key growth areas, with significant progress in media platform, connected car, and IPTV. The announcement of a second top 10 smart TV OEM integrating our TiVo operating system and the additional design win for our in-vehicle infotainment platform validate our independent media platform approach and are prime examples of our continued momentum. As discussed at last fall's Investor Day, we offer a wide range of solutions designed to create extraordinary entertainment experiences for end users and improved safety, comfort, and convenience in the car. Four of our solutions are in markets that are expected to expand rapidly over the next several years, while the other solutions are in markets that are more mature and relatively stable over a longer-term horizon. We refer to these areas as growth and core, respectively. As I mentioned last quarter, our strategy is focused on driving revenue growth in the following key areas: connected TV advertising, where we offer our TiVo Operating System to power smart TVs and monetize ad-supported viewing; IPTV, where we offer our industry-leading content-first video platform; in-vehicle infotainment, where our DTS AutoStage combines broadcast radio and Internet metadata to enhance the in-cabin experience; and in-vehicle monitoring, where DTS AutoSense combines our imaging technology and machine learning to improve safety, comfort, and convenience. Each of these markets is expected to expand rapidly over the next several years as Internet connectivity, streaming, and consumer expectations cause entertainment to be more ubiquitous and advertising dollars shift to new delivery methods. With decades of experience, we've leveraged our industry-leading technology to target these specific market opportunities with independent media platforms that are differentiated, unbiased, and tailored to provide a personalized consumer experience. We believe these attributes will allow us to participate in the rapid expansion of these markets and drive revenue growth through a combination of license fees and monetization. Given the significant progress we've made over the last several months, I'd like to provide a bit more detail on some of our major accomplishments since our last earnings call. Within our media platform business, we signed a second top-10 smart TV OEM to integrate our TiVo operating system into their product lineup with plans to launch initially in Europe next year. This is an exciting development as the signing of a second OEM clearly validates the market appeal of our offering and leaves us well-positioned for long-term monetization growth. As we outlined last quarter, our solution provides several key advantages to TV OEMs. We offer a truly independent media platform with unbiased search and discovery that is not influenced by a particular content provider or advertiser. Our unique business model enables smart TV OEMs to brand the experience, retain customer ownership, and participate in usage-based economics over the life of the product. These aren’t TiVo TVs; they are OEM-branded TVs powered by TiVo. From Xperi's perspective, with the TiVo Operating System as the conduit for consuming content on smart TVs, we will be able to capture a portion of the ad revenue generated by consumers as they view ad-supported content over the life of the TV. With our second TV OEM on board, we're even better positioned to participate in the growth of connected TV advertising, which is expected to more than double to become a $28 billion market in 2026. Lastly, we've been working collaboratively in our partnership with Vestel to bring the first powered-by-TiVo TVs to market in Europe. While our software stack is ready, given market dynamics and based on retail planning with Vestel, we now expect the first shipments in Europe to be in the second half of 2023, in preparation for the holiday buying season. This will have no impact on our guidance for the year, as only a small amount of monetization revenue is expected in late 2023. With Vestel's volumes increasing as its rollout expands and a second top-10 OEM expected to begin shipping next year, we expect monetization revenue to begin to grow meaningfully in 2024 and beyond. Overall, we're very pleased with our continued progress on our independent media platform strategy and its long-term growth prospects. Our Connected Car business also had a strong quarter. The automotive industry is making extensive investments in connected car as Internet connectivity is turning the cabin into a personal entertainment space. As part of this transformation, we were awarded a new program for DTS AutoStage, our in-vehicle infotainment platform with a major Japanese automobile manufacturer. This global program is expected to incorporate AutoStage into North American vehicles later this year, followed by Europe and Asia in 2024. Our AutoStage and AutoSense solutions have now been awarded a combined total of more than 10 automotive OEM programs that include over 100 specific car models. With these program wins, our technology is expected to be incorporated into tens of millions of vehicles globally over the next five years. In addition to these next-gen platforms, we also continue to make progress in our well-established HD Radio business. Our HD Radio solution, which is the North American standard for digital radio, has been launched in 12 additional models for the US market and six additional models for Mexico, increasing our penetration in new car production. Lastly, we're pleased to extend our relationship with Harman, a major Tier 1 automotive supplier, signing a multi-year license renewal, which we expect will incorporate HD Radio into millions of cars over the next six years, demonstrating the resilience of this technology and providing a stable revenue stream for years to come. Together, these wins set the stage for meaningful long-term connected car revenue growth, as in-vehicle infotainment and monitoring are expected to double, becoming a $40 billion market in 2027. Within our Pay-TV business, we're also making progress despite the continued industry decline in certain legacy Pay-TV platforms. Our IPTV platform continues to experience double-digit subscriber growth with new rollouts by major service providers across the Americas. For example, Eastlink, a major Canadian cable provider, has launched TiVo IPTV across their Canadian footprint. It's clear that our content-agnostic approach, bringing all entertainment together for consumers to find, watch, and enjoy, provides a superior customer experience and is gaining traction with service providers and broadband operators. In addition, Friendly TV, a leading affordable live TV provider for the whole family with more than 750,000 subscribers, selected TiVo as their personalized content and discovery platform. As a result, we'll be providing search, discovery, and personalized recommendations to their large subscriber footprint. Turning to consumer electronics, as we approach our 30th anniversary of DTS, the technology and durability of our audio business remains strong. During the quarter, we signed a series of major multi-year license renewals for our DTS audio-enhancing technology. These license agreements allow many of the largest consumer electronics manufacturers to continue integrating DTS audio and Play-Fi into their products for the next several years, validating the value of these innovative technologies. Let me now turn to Perceive. As we previously shared, we continue to expect first revenue in 2023. The bigger picture, however, is rapidly growing more interesting. The launch of ChatGPT five months ago marked a real inflection point in the field of machine learning. As these large models gain traction, it has spurred significant discussion about more rapid and wide-scale deployments and the challenges associated with scalability. The advanced compression software developed by our Perceive team is highly relevant to that challenge and represents a significant opportunity for value creation as companies grapple with the potential for runaway costs as the technology is more broadly used. Perceive's technology advantages, specifically targeting performance and power efficiency, matter now more than ever, and we believe the future is bright as we complete work on larger language models in the near term and demonstrate our progress to customers and partners across the industry. In summary, it was a successful quarter from many perspectives. We continue to hit specific milestones that both validate our solutions and reaffirm our strategy. Our solid financial results confirm we're on the right path, and as these design wins convert into revenue over time, we expect to achieve our long-term financial targets. With that, I'll turn the call over to Robert to discuss our financials.

Thanks, Jon. Let's get straight into the numbers. As Mike noted earlier, unless otherwise noted, all comparisons are against the same quarter in the prior year. Total revenue for the first quarter was $127 million, an increase of 7%. This increase was primarily driven by consumer electronics and media platform, partially offset by a decline in Pay-TV. Pay-TV, our largest revenue category, was down 6% as strong growth in IPTV was more than offset by declines in our core Pay-TV product lines such as classic guides and consumer hardware subscriptions. Consumer electronics was up 31% and driven by growth in home audio and video solutions from renewals signed in the quarter, some of which were minimum guarantee arrangements in which the revenue was taken upfront. Additionally, we had strong reported shipments of game consoles. Connected Car was up 4% due primarily to growth in our AutoSense and AutoStage products as well as modest growth in HD Radio. Media Platform was up 34%, driven by growth in monetization and contribution from the viewed acquisition. Our non-GAAP gross margin for the quarter was $100 million or 79%, an improvement of over 110 basis points, driven primarily by a revenue mix shift towards consumer electronics, which is our highest gross margin category. Non-GAAP adjusted operating expense for the quarter was $99 million, up 4% from the prior year carve-out financials but down 5% sequentially. Our adjusted EBITDA was $7 million, an increase of approximately 70% from the prior year, yielding a 5% adjusted EBITDA margin. After accounting for tax and interest expense, our non-GAAP earnings per share was $0.04. Moving to the balance sheet, the company ended the quarter with $111 million of cash and cash equivalents. Our cash flow from operations in the quarter was a usage of $43 million due to the timing of bonus payments and certain collections. Specifically, the employee bonus payout, which occurs annually in Q1, was approximately $32 million, similar to last year's amount. We also saw an increase in accounts receivable and other assets of about $12 million, most of which has now been collected. Overall, we expect operating cash flow to be positive for the balance of the year and to be approximately breakeven for the fiscal year. Turning to our financial outlook for 2023, we are reaffirming the previous guidance ranges and providing the following commentary. As provided on the last earnings call, we continue to expect full-year revenue to be in the range of $510 million to $540 million. Full-year adjusted EBITDA margin is expected to be in the range of 6% to 10%. Also unchanged, we expect cash taxes and non-GAAP tax for the year to be in the range of $20 million to $25 million. Although the Q1 non-GAAP tax expense was relatively modest at $0.5 million, we expect a higher non-GAAP tax expense for the remaining quarters of the year. Basic share count is still expected to average 43 million for the year and fully diluted share count is expected to average approximately 49 million for the year. That concludes our prepared remarks. Let's now open the call for questions.

At this time, we will begin our question-and-answer session. Your first question comes from Hamed Khorsand from BWS Financial. Your line is open.

Hi. Could you just talk about the upfront revenues that you generate from the renewals? And how are you expecting to fall into place as far as the guidance is concerned, just given that it seems like Q1 is going to be very high consumer electronics revenue quarter?

Hi Hamed, this is Robert. I can address that. The upfront revenue we saw in Q1 is part of our plan for the year, and we anticipated how it would impact our guidance. We view these figures as reinforcing our DTS licensing business. We will be receiving payments for these contracts over several years. It’s a great way to kick off the year and aligns with our overall strategy.

Okay. And any update as far as what you're seeing on the Autosense side, especially within the US market, if there's been any adoption of your technology?

I would say that the interest in Cabin Safety Solutions continues to grow. We are meaningfully engaged with a sizable pipeline of automakers. From a standards perspective, there isn't necessarily any major event that has occurred of late. But I do think the industry globally is clearly moving in that direction and I think we continue to have unique technology and a ton of domain expertise that is going to help us continue to win business in that space.

And my final question was this TV OEM that you've won, was this because of Vestel that you wanted or was this because of Roku making their own TV?

No, I think it really highlights and confirms our strategy of creating a true independent media platform where TV manufacturers can control their own brands, own the customer relationship, and benefit from long-term economic opportunities. I believe this business model, along with the exceptional user experience, user interface, search, and discovery features we provide, is generating a strong response from TV manufacturers. This indicates that we are progressing towards what we believe is a solid pipeline. More importantly, it demonstrates that we are on the verge of something significant that could have a substantial impact on our business and growth in the coming years.

Your next question comes from the line of Jason Kreyer from Craig-Hallum. Your line is open.

Hi. Good afternoon, guys. Thank you. Curious, as you approach the launch of the TiVo OS being built into these TVs with Vestel first later this year. Just curious about the strategy on consumer interaction or maybe consumer awareness, just as these are the first devices that TiVo built in. I'm wondering if there's like a broader marketing campaign that goes along with that.

Yes, we're working in partnership with our TV partners to highlight some of the advantages of the interface as well as the fact that there's new innovative technology on the TV platform. So in short, I think it will be coupled with clear marketing. But I think more than anything, what we want is as people turn on the TV that they have a great content-first user experience, because that's the very reason people are buying TVs, right, as they want to get to the content they want to watch, in the simplest and easiest ways and understand where it's available. I think we've designed our product in a way that facilitates that. As a result, the learning curve will be relatively short, and I think the satisfaction that comes with the experience will drive even more interest in the platform over time.

And then last week at the new fronts, you guys kind of foreshadowed a move into the domestic market with TiVo OS. I'm just curious about what the process is that you go through there, if you're identifying OEMs and having engagement or how that process will look over the course of this year?

I expect that we'll continue to make progress on our pipeline. Naturally, we're talking to people globally. So I would say stay tuned. But I think as we indicated when we first announced Vestel, which is great to have their partnership, we thought there would be more. Today's shared some additional news that clearly revalidates that view and I think it will continue.

Okay. I'm going to squeeze in just one more on connected car. We've just seen more auto manufacturers kind of move away from things like CarPlay and Android Auto. Curious if you think that creates a bigger opportunity for AutoStage as you go forward?

In short, I think automakers are increasingly looking to differentiate their cabins and certainly to offer next-gen experiences around the core media platforms or the media delivery sources that are in the car. I think certainly, AutoStage, as we move into video, which we expect to see in this next generation of cars, is part of our broader platform. The fact that we are an independent platform for the automakers to help further customize and create the experience they want in the cabin, leveraging our technology base and having easy access to next-gen radio among other things, bodes well. Certainly, I think as you mentioned, some of the other competing technologies in the car, as people look to own their own experiences, we're a great partner to do that.

Your next question comes from the line of Nick Zangler from Stephens. Your line is open.

Congrats on the second smart TV win. That's awesome. Just a high level, I'm wondering if there are any further details you could provide on that win? Maybe when specifically you might see the launch within 2024, first half catalyst or back half. Does it look and feel similar to the arrangement with Vestel, and maybe you could size it up, I guess, relative to the initial win at Vestel that could be helpful?

Yeah. Nick, they're a top 10 provider, as we said. I think we'll be able to maybe share a bit more information as we get into the fall, which is when I expect this will likely become public, as to who the brand is. The business model here is consistent across our TV manufacturers. As for exact timing and sizing, I think that's under discussion as we continue to work with this partner. So I would say stay tuned.

Got it. And then how about just how quickly this was able to come to fruition? Just to level set how fast these can come about. How long would you say you've been talking with this specific OEM and to gauge from initial contact to actually committing to launch, how long that process can take, especially in this environment where you've got the Rokus of the world building their own TVs and maybe some are accelerating their plans to look for partners like what you can provide in TiVo?

I would say the sales cycle is usually within a year, but it can differ. It depends on factors such as the readiness level, the technical complexity of what the TV manufacturer aims to achieve, and the chipsets they're currently using in their TVs. Much of the necessary pre-validation work occurs before any final business agreement. As we progress further in our pipeline, I expect to provide more insights into what our goals look like. Overall, this outcome stems from consistent engagement, and we are excited to have them on board and are eager to collaborate in the market.

Awesome. And then I might have missed it, but I'm not sure if you touched on it. Any update on the Vestel TV launch, specifically when those TVs will hit retail? Just curious if we should start to expect some revenue contribution in Q2, or is it back half 2023 contribution?

Late 2023, Nick, is what we'd expect. What we saw is based on some retail planning, even though our software stack is ready to go, the timing of TVs in Europe for Vestel hitting retailers is likely coming in before the holiday buying season. So it's going to be second half.

Media Platform revenues were up 33% in the quarter, which is a very strong result. It might be just slightly below our projections. Did that number align with your expectations for the quarter? Additionally, if you are seeing any advertising pressure in the market at this stage, could you mention that, or are you in such a ramp-up mode that it isn't noticeable? I'm looking for general commentary on the revenue figure and its performance.

Let me just address from a broader market perspective; definitely, we're seeing there is some softness, but we have a number of things going in that category. So that helps blunt the impact of that. Robert, would you like to add?

Sure. I would say that in terms of what we were expecting, Nick, we were more or less in line. Within that category, we're not yet experiencing the value we ultimately expect to receive within monetization until we really get a foothold into the TVOS market. So the upside for us this quarter is contribution from viewed and growth in monetization, which was reasonable, I think. But that category, I think is really emerging for us as an interesting growth category going forward.

Awesome, great. Thanks so much, guys. Appreciate it.

Thank you, Nick.

There are no further questions at this time. I would like to turn the call back over to the presenters.

Thanks, operator, and thanks, everyone, for joining today's call. We're excited about our continued success and financial performance. I'd like to thank our employees, customers, and partners for helping us achieve these strong results. We look forward to reviewing our Q2 results with you in early August. This concludes today's call.

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