Xperi Inc.

Good day, everyone. Thank you for standing by. Welcome to the XBerry 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 Iberg, XBerry Head of Investor Relations. Mike, please go ahead.

Good afternoon, and thank you for joining us as Xperia reports its first quarter 2023 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 you can access 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 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 Xperia's separation from Xperia Holding Corporation on October 1st of 2022. Xperia Holding Corporation is now known as Audia 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 discussed 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, which can be 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 Xperia's CEO, John 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, as well as 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 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 systems 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 Xperia'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 Festel'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 cars 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 Auto Stage, our in-vehicle infotainment platform, with a major Japanese automobile manufacturer. This global program is expected to incorporate Auto Stage 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 U.S. 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've 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. Robert?