Xperi Inc.

Good day, everyone. Thank you for standing by. Welcome to the Xperia fourth quarter and full year 2022 earnings conference call. During today's presentation, all participants 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 Iberg, Xperia Head of Investor Relations. Mike, please go ahead.

Good afternoon and thank you for joining us as Xperia reports its fourth quarter and full year 2022 financial results. With me on today's call are John Kirchner, Chief Executive Officer, and Robert Anderson, 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.xperia.com. Before we begin, I'd like to provide a few reminders. First, I would like to note that our full year 2022 financial results include results presented on a carve-out basis for the periods prior to Xperia separation from Xperia Holding Corporation on October 1st, 2022. Xperia Holding Corporation is now known as Audia. 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 discussed today, please refer to the risk factors and MD&A sections of our SEC filings including our registration statement on Form 10. 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 their most directly comparable GAAP measures, which can be found in the investor relations section of 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 Xperia CEO John Kirchner.

Thank you, Mike, and thank you, everyone, for joining us on our fourth quarter and full year 2022 earnings call. We're excited to announce strong financial results for our first quarter as an independent company. Revenue in the quarter was $136 million. an increase of 9% from the prior year. For the full year of 2022, total revenue was $502 million, representing a 3% increase from the prior year. Robert will provide a more detailed review of our financial performance in just a moment. We are making material progress in our key growth areas, with incremental traction in media platform, IPTV, and connected car. Recent announcements, such as AM Logic integrating our TV OS and related technologies into their smart TV chipsets, and our latest design win for DTS AutoStage, which has been expanded to include TiVo's video platform in the connected car infotainment experience, are prime examples of our increased 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 as well as to improve 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 other solutions are in markets that are more mature and relatively stable over the longer-term horizon. We refer to these areas as growth and core, respectively. Our strategy is focused on driving revenue growth in four key areas, connected TV advertising, IPTV, in-vehicle infotainment, and in-cabin monitoring. With decades of experience, we have brought to market independent media platforms that are differentiated, unbiased, and tailored to provide a personalized consumer experience. We believe these attributes will allow us to capture share and drive revenue growth through a combination of license fees and monetization. The connected TV advertising market is expected to more than double over the next five years as advertisers shift their marketing investments toward the growing trend in video streaming. The IPTV market is also expected to more than double over the next five years as broadband into the home continues to increase. More than 80% of household broadband consumption is for video, a trend that is expected to continue. With over 70% of new vehicles projected to be capable of broadband connectivity by 2025, the in-vehicle infotainment market is expected to rapidly expand as more vehicles connect to the internet and a wider variety of content is consumed. Lastly, the in-vehicle driver and occupant monitoring markets are expanding quickly as the industry and regulators aim to make the vehicle a safer place. Diving a little deeper into each of these markets, our strategy in connected TV advertising is to work with smart TV OEMs to bring TVs to market incorporating our TiVo OS. With our platform as the conduit for consuming content, we'll 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. As you may have heard, We impressed at CES with live demos of the first Festel TVs powered by TiVo. It was exciting to see these smart TVs, which are expected to begin shipping later this year, running the TiVo platform in a production environment at full scale. The TV OS has several key advantages for 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. As smart TVs with TV OS begin to shift, The path to monetization is relatively straightforward, and by sharing a portion of the ad revenue with the TV manufacturers, we believe we can build stronger OEM relationships to drive higher volumes over time. We expect to have a footprint of at least 7 million TVs powered by TiVo within three years, which would yield an annualized revenue run rate of approximately $140 million, while delivering meaningful margin expansion over time. Our IPTV offering sits within our pay TV business and has seen rapid success. We offer a best-in-class cloud-based entertainment platform for video and broadband service providers. Our content agnostic approach, where we bring all entertainment together to find, watch, and enjoy, provides consumers with a personalized engagement experience that is superior to alternative offerings. We continue to expand our IPTV subscriber base through new service providers, across the Americas and ended the year with 1.2 million subscriber households. IPTV growth was strong in the fourth quarter, offsetting modest declines in the larger, more mature pay TV markets, resulting in total pay TV revenue being modestly higher year over year. Over the next three years, we expect IPTV revenue to grow from approximately $40 million to over $100 million. Within our connected car business, we have two significant growth opportunities, namely in-vehicle infotainment and in-cabin monitoring. We address these opportunities with our DTS AutoStage infotainment and DTS AutoSense solutions. The automotive industry is making extensive investments in connected car as internet connectivity is turning the cabin into a personal entertainment space. We have longstanding relationships with automotive manufacturers who have adopted our HD radio solution, deployed in over 95 million vehicles, and now we are leveraging our media platform solutions, incorporating metadata, our legendary search and discovery, and TiVo's video capabilities to provide a vastly improved in-cabin entertainment experience. As anyone familiar with automotive, excuse me, as anyone familiar with the automotive market understands, These contracts take a long time to win and are long term in nature. As we look at our committed business and connected car at year end, we have over $300 million of revenue to be recognized over the next several years. And to put that in perspective, that's more than $300 million on a business that posted $84 million in revenue last year. Importantly, our pipeline of new automotive opportunities continues to grow. During the quarter, we were awarded our first design win incorporating video into our AutoStage in-car infotainment platform. This offering, which goes into production later this year, will bring TiVo's video platform into the center console. Also in connected car, we continue to be awarded design wins for AutoSense, our in-car driver and occupant monitoring systems, most recently winning a major program with a large Asian automotive OEM. Together, these wins continue to set the stage for meaningful long-term connected car revenue growth. We expect these four key growth areas to represent over 40% of our total revenue in three years, a significant increase from approximately 20% today. Our existing monetization business, which includes licensing our viewership data, advertising on our program guides, and licensing the recently acquired View Technologies generates about $40 million of revenue annually. By launching smart TVs powered by TiVo and participating in the monetization of ad-supported content, we expect this business to more than quadruple to over $190 million annually in a three-year timeframe. Next, having exceeded 1.2 million paid subscriber households, Our TiVo IPTV platform is currently generating approximately $40 million of revenue annually, primarily from recurring subscriber fees. Over the next three years, we expect annual revenue to more than double to over $100 million due to subscriber growth and increased revenue per household. Our AutoStage and AutoSense platforms continue to win new contracts for future model years. and we expect accelerating revenue growth as these contracts go into production. In addition, we plan to incorporate ad monetization into the AutoStage platform, which will create another opportunity for revenue growth downstream. As previously discussed, this is a long-term play where we expect revenue to grow from $4 million to approximately $40 million annually in three years, with more substantial revenue coming in the five- to seven-year range. Altogether, we expect our key growth areas of connected car, monetization, and IPTV to grow from approximately $84 million to over $330 million in three years, contributing $246 million of high margin net new revenue. Lastly, turning to perceive, we expect first revenue to occur in 2023, though due to some uncertainty around timing and amount, there is no perceived revenue included in our annual guidance. We continue to believe perceived represents a significant option for value creation as machine learning use cases move to the edge. For example, there's increasing awareness in the industry of the power of large machine learning models, such as large language models, that are delivering impressive results. We continue to provide tools and software applications for prospective customers as they evaluate and scope features based on the implementation of large networks on their edge devices. Notably, at CES we demonstrated a large language model running on our platform, sparking significant customer interest. We believe that our approach is distinctive and represents a clear value proposition of running large data center class networks at the edge at lower power than anyone in the industry. Thus, we intend to continue to invest prudently as we evaluate how best to generate the highest return on our investment and navigate what we believe will be a significant move to the edge over the longer run. With that, I'll turn the call over to Robert to discuss our financials. Robert?