Xperi Inc.

Everyone, thank you for standing by. Welcome to Xperia's second quarter 2023 earnings conference call. During today's presentation, all parties will be in 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.

Thank you. Good afternoon, and thank you for joining us as Xperia reports its second 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.expery.com. Before we begin, I'd like to provide a few reminders. First, I would like to note that unless otherwise noted, all comparisons are to the same quarter of the prior year. In addition, the second quarter of 2022 was calculated on a carve-out basis prior to Xperia's 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, or other statements about future events which are based on management's current expectations and beliefs and they're 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-Q. 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 at the conclusion of this call. I would now like to turn the call over to Xperia CEO John Kirchner.

Thank you, Mike, and thank you, everyone, for joining us on our second quarter 2023 earnings call. We're pleased to deliver another quarter of significant strategic progress and solid financial results. I'll let Robert walk you through the details in just a moment. But let me touch on revenue and growth rates. Revenue in the quarter was $127 million, up 1% from the prior year. But as some of you may recall, last year's Q2 included a significant one-time benefit from a mobile imaging customer, impacting consumer electronics revenue. When excluding this benefit, year-over-year growth would have been in excess of 10% due to strong growth in media platform and connected car. Our first half revenue was consistent with the growth rate projections we discussed at our investor day last September, with media platform and connected car growing rapidly, consumer electronics showing modest growth, and pay TV down mid-single digits. The net result of our first half performance, coupled with initiatives underway, is that we remain on track and expect to achieve our full year outlook. Lastly, we're pleased to see strategic momentum continue in key growth areas of our business, particularly in media platform and connected car. Our efforts are focused on four key growth areas, and we're making significant progress in each. These are connected TV advertising, where we offer our TiVo operating system to power smart TVs and monetize ad supported viewing, in-cabin entertainment, where our DTS AutoStage combines broadcast radio, internet metadata, and video to enhance the automotive experience. In-cabin monitoring, where DTS AutoSense combines our imaging technology and machine learning to improve automotive safety, comfort, and convenience. And IPTV, where we offer our industry-leading content-first video over broadband platform. 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. I'd like to walk you through some of our significant accomplishments since our last earnings call. Within media platform, earlier today we announced that Sharp is the second TV OEM to launch TVs powered by TiVo. We're excited to be partnering with Sharp on a multi-year, multi-million unit relationship that is expected to ship TVs starting in Europe next year. In addition, we signed a third smart TV OEM to integrate TiVo OS. We now have three TV OEMs with plans to ship product in 2024. And importantly, we expect to have distribution in both Europe and the US. Our pipeline remains robust. and we anticipate having other OEMs under contract by the end of this year. This is a tremendous accomplishment and strong validation of our strategy. As outlined on last quarter's call, we expect Vestel to have TVs powered by TiVo in the European market for the upcoming holiday season. These initial shipments are an important first step. However, the monetization of these TVs will build as our footprint grows and users engage with content. In addition, Sony, a longtime partner of Xperia, will deploy our web browser technology within their Smart TV lineup, enabling content search and discovery and creating an additional pathway to add supported content monetization over time. Overall, we're very pleased with the progress of our independent media platform strategy and its long-term growth prospects. Our connected car business also saw continued momentum in the quarter. As you've likely seen, the automotive industry is making extensive investments in making cars more connected, as internet connectivity is dramatically altering the in-cabin entertainment experience. As part of this transformation, our DTS AutoStage in-cabin entertainment platform is expanding rapidly. AutoStage is now deployed in more than 4 million cars across five automotive brands globally, and we expect the momentum to continue. BMW's decision to deploy DTS AutoStage video service, powered by TiVo, in their 5 Series later this year is a good example of our progress. In addition to the initial success of AutoStage, we expect this combined footprint to grow rapidly, driven by model and geographic expansion, creating the long-term opportunity for advertising monetization and feature upselling. To further improve the user experience, we recently signed agreements with broadcast groups representing over 4,000 radio stations across North America, Europe, Australia, and New Zealand. This extensive network of broadcasters will enhance the in-cabin experience by sending additional metadata that Autostage will combine with internet content to enrich the user experience. Enhancements include additional content such as album art, lyrics, personalized recommendations, and a real-time guide showing what is currently playing on other stations. Turning to DTS AutoSense, our in-cabin driver and occupant monitoring system continued its momentum during the quarter. We signed a new contract with a top three automotive OEM with plans to go into initial production in late 2024 for the 2025 model year. We now have design wins from six automotive brands encompassing over 80 different models. In addition to these next-gen platforms, we continue to make progress in our well-established HD radio business. This quarter, our HD radio solution has been launched on more than 10 additional models for the North American market, increasing our share of new car production. The in-cabin entertainment and monitoring markets are expected to double over the next five years, and the success we're seeing today sets the stage for meaningful, long-term connected car revenue growth. Within the pay TV business, IPTV continues to make steady progress, helping to mitigate the secular decline in linear pay TV subscribers. Our IPTV solutions had another consecutive quarter of healthy double digit subscriber growth, adding more than 150,000 net new subscribers in Q2. The continued momentum in IPTV is being driven by new broadband service providers offering our IPTV services, And at the same time, customers increasing the velocity of IPTV adoption as they package our solution together with their broadband services to create a more attractive bundle. In addition to collecting a monthly subscriber fee for IPTV, we also monetize the viewing of ad supported content through TiVo Plus, where we offer nearly 160 channels of free ad supported television content. As the market is shifting towards more fast content being consumed, Our video service provider customers are increasingly offering TiVo Plus to expand the entertainment options to their subscribers, whether broadband only or video. Lastly, our momentum continues with the expansion of TiVo Plus availability across 25 additional video service providers during the quarter, bringing more scale to this element of our monetization footprint. In our Discovery product line, we license search and recommendation technology to our customers. enhancing their ability to drive consumer engagement. During the quarter, we significantly expanded our relationship with a top five U.S. video service provider, increasing our footprint by millions of additional households and demonstrating the value of our deep heritage of applying AI to personalized content discovery. Turning to consumer electronics, we signed several renewals with major consumer electronics manufacturers. These license agreements allow consumer electronics manufacturers to continue integrating DTS audio and PlayFi wireless technologies into their products for the next several years, validating the market appeal and longevity of these innovative technologies. In addition, we celebrated the 30th anniversary of DTS, our immersive audio technology first deployed in the 1993 classic film Jurassic Park, now pervasive across consumer electronics and mobile devices. Turning to Perceive, we're continuing down the path we set out last quarter and expect first revenue this year against the backdrop of tremendous interest in large-scale AI. We continue to make progress in our development efforts to scale our compression technology and are engaged with customers and partners on its applications deploying large language models, or LLMs. Recognizing the magnitude of this opportunity, We're exploring options for strategic partnering to help accelerate our path to market. We expect to report additional progress over the coming quarters. 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. We remain on track to achieve our strategic objectives and long-term financial targets. With that, I'll turn the call over to Robert to discuss our financials.