Xperi Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the XBRE third quarter fiscal year 2021 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. To ask a question, press star 1 on your telephone keypad at any time. I would now like to turn the call over to Jerry Weinfeld, Vice President of Investor Relations for XBRE. Jerry, please go ahead.

Good afternoon, everyone. Thanks for joining us as we report our third quarter fiscal year 2021 financial results. With me on the call today are Jon Kirchner, CEO, and Robert Andersen, CFO. Also on the call is Samir Armali, President of IP Licensing, who will be available along with Jon and Robert to answer questions during the Q&A portion of the call. Before we begin, I would like to provide two reminders. First, today's discussion contains forward-looking statements that are predictions, projections, or other statements about future events which are based on management's current expectations and beliefs and therefore subject to risks, uncertainties, and changes in circumstances. Please refer to the risk factor section in our SEC filings, including our annual report on Form 10-K, for more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after the call. Second, we refer to certain non-GAAP financial measures which exclude 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, Thanks, Jerry, and thanks, everyone, for joining us.

We had a strong quarter with better than expected revenue, cash flow, and earnings. Revenue was $219.4 million, up 8.2% year over year, mainly due to increases in IP, partially offset by declines in the product business due to supply chain constraints. Non-GAAP earnings per share was 53 cents, up 179% year over year. We generated $82.9 million in operating cash flow. An increase of 33% year-over-year and repurchased approximately $25 million of stock. Although we saw an increased impact on the product business from CHIP and general supply chain constraints, we remain on track to deliver strong financial results for the year. At a high level, we made solid progress on the following growth drivers during the quarter. DTS AutoSense launched on the BMW iX series in Europe, with more models to come in 2022. DTS Auto Stage delivered in new models. In addition to the S-Class, Mercedes has now implemented DTS Auto Stage in its C-Class vehicles. Disney Plus launched as a streaming partner in our IMAX enhanced ecosystem. We accelerated adoption of our IPTV solutions and integrated MobiTV to provide a managed service offering. We increased the footprint and available content for the TiVo stream and advanced discussions toward delivering StreamOS on connected TVs. And we made progress toward reestablishing our semi-IP business with the addition of YMTC as a new licensee for our hybrid bonding portfolio. Let me now begin with a discussion of our IP licensing business. IP revenue in Q3 was $101.6 million, up 27% year over year. This increase was primarily driven by the success we've had with renewals and expanded licenses over the past year, as well as some new IP agreements signed during Q3. As is typical with IP businesses, these results reflect some agreements that include catch-up or upfront license fees. We continue to make progress on certain key growth drivers in the quarter. In OTT, which represents our largest growth driver, We continue to engage with a strong pipeline of streaming services around expanded renewals and new license agreements. In Canada, we are awaiting a decision in the initial round of litigation. We remain very confident in the relevance of our IP portfolio and in our ability to ultimately achieve a market-based resolution, although predicting timing is always difficult. As a reminder, we filed second rounds of litigation against Videotron and Bell Canada earlier this year. In Semi-IP, we announced a new license with YMTC, a semiconductor memory manufacturer based in China. While we're still in the early stages of reestablishing our semiconductor IP business, this license is another data point underscoring the relevance of our IP in hybrid bonding. YMTC is the first company shipping commercial 3D NAND products that incorporate hybrid bonding. This agreement recognizes the broad, fundamental nature of our bonding IP portfolio and our leadership position in that market. It is also a proof point in the continued proliferation of hybrid bonding into an expanding range of semiconductor applications, including sensors, memory and logic. Our execution year to date for the IP business as a whole puts us on track to exceed our $350 million average annual baseline by roughly 10% this year. We are confident that our IP licensing business is better positioned than ever, supported by long-term agreements that generate significant, recurring, and very profitable cash flows well into the future. Moving to our product business, total product revenue was $117.7 million, down 4% year over year. While we saw growth in monetization and IPTV, This was offset by declines in connected car, mobile devices, game consoles, and consumer hardware from supply chain constraints that impacted our customer shipment volumes. First, a comment on the supply chain. Although the year started off strong, beginning in late September we started to see signs that the impact of supply chain constraints on our product business was greater than in prior quarters. Given this disruption, we are seeing some year-over-year declines in customer volumes, impacting our per-unit royalties. Importantly, we've made significant progress on our key initiatives, and as we look ahead, we strongly believe that our product business is solidly positioned for growth. In the consumer experience category, revenue was $46.1 million, down 6% year-over-year. As I mentioned, the decrease in Q3 was mainly driven by unit declines in mobile, game consoles, and consumer hardware. We had another solid quarter for unit sales of the TiVo Stream 4K and continue to make progress on building out the TiVo Stream platform. On the content front, we continue to expand our ad-supported TiVo Plus offering with new content partners, including QVC, Hallmark Movies & More, Magnolia Pictures, and Kevin Hart's Laugh Out Loud. We also expanded our relationship with Pluto TV to integrate 33 new channels including Showtime Selects, Pluto TV 007, the Paramount Movie Channel, and more. Lastly, we added Acorn TV to our SVOD lineup. We also saw strong growth in connected TV monetization during the quarter as we successfully launched a new connected TV advertising product with unique audience targeting based on TiVo's viewership data. Importantly, on the IMAX Enhanced front, today we jointly announced a new partnership with the Walt Disney Company and IMAX. Beginning November 12th, for the first time ever, Marvel fans will be able to enjoy their favorite titles at home with IMAX Enhanced on Disney+. This is a significant step in expanding the content available in the IMAX Enhanced ecosystem. Moving to our pay TV business, revenue was $54.2 million, down 2% year over year. We are very pleased with the success we are seeing as more customers begin to adopt our IPTV solutions. Additionally, with the smaller than expected year over year decline in revenue, our strategy is being proven out as our higher value IPTV solutions are mostly offsetting declines in our traditional interactive program guides. Q3 was our first full quarter with MobiTV following the completion of the acquisition in Q2. The MobiTV integration is progressing well, and we're on track to complete integration during the fourth quarter. With the MobiTV integration completed, we'll be able to further scale our overall IPTV offerings and accelerate subscriber growth. During the quarter, we help customers, excuse me, we help customers including Cable One, Service Electric Cablevision, Blue Ridge and Armstrong launch and begin scaling their IPTV offerings. Overall, we continue to see another quarter of strong subscriber growth for our IPTV services. Moving to the connected car category, revenue was $17.4 million, down 6% year over year, as production reports received after the end of the quarter clearly indicate an increased impact from the chip supply constraints on our HD radio business. Despite the supply chain issues, during the quarter, 24 new models launched with HD radio technology in the U.S. and Mexico. We also launched HD radio in two new categories, trucks with Daimler, and Motorcycles with BMW. Additionally, we have been approved for ISO 9001 certification for HD radio. This is a critical milestone in meeting global auto industry quality standards to ensure our position in the market. BTS Auto Stage continued to roll out in Mercedes models. The new C-Class launched with our technology in Europe with cars arriving in the US at the beginning of 2022. We continue to work an active pipeline and are participating in RFQs with car companies across Europe, Japan, and North America for programs launching between 2022 and 2025. For DTS AutoSense, BMW launched vehicles with our occupancy monitoring system technology in Europe on the BMW iX. These models will arrive in the US at the beginning of 2022. We are proud to be part of the first OMS solution brought to market. Further, truck lines in Japan continue to launch with our driver monitoring system technology, and we are pleased to see our production DMS solution expanding in Asia with the recent shipment of trucks with our technology in Singapore. Additionally, Xperia is proud to have been recognized by Frost & Sullivan as Company of the Year for connected car media industry best practices. We believe this third-party validation of our products and team Highlights our innovation efforts and enhances our market position in the connected car category. In our perceived business, we continued to engage with customers across multiple markets and supported their development efforts with the ERGO platform. As we mentioned last quarter, we provided our machine learning tools to select customers, and this quarter we followed up with additional software, chips, and boards to support customer development efforts. We continue to see significant demand for power-efficient, high-performance AI capabilities for next-generation products. Unfortunately, one of our customers canceled a product originally slated for 2022. That decision is unrelated to the performance and capabilities of our platform. We continue to work with a range of other partners on the development of innovative products utilizing Ergo. However, given the current supply chain environment and its potential impact on elongating production schedules, The exact timing of when the first perceived enabled product will come to market is uncertain, but likely within the next 12 to 18 months. Lastly, I want to touch on the significant attention and focus being placed on the metaverse. The move toward greater acceleration of investment, development, and adoption of advanced AR VR technologies in the creation of an omnipresent digital presence is a big positive from our point of view. Xperia has developed deep IP expertise, products and solutions in the spatial audio, imaging, personalization, discovery, AI, presence and awareness areas. Many of these enabling technologies are already in the market, and we've been working on others with partners in this space over the past few years. In the end, enabling technologies like these will be essential and fundamental. Xperia has always been focused on bringing extraordinary experiences into our lives, and the metaverse is emerging as the next frontier. Exciting times ahead as we participate in this market and create new opportunities for growth. With that, I'll turn the call over to Robert to discuss our financials. Robert?