Xperi Inc.

Good day, everyone. Thank you for standing by. And welcome to the Xperia fourth quarter and full year 2024 earnings conference call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the call will be open for the questions. I would now like to turn the call over to Catherine Moyari from Xperia's Marketing and External Communications Department. Catherine, please go ahead.

Good afternoon and thank you for joining us as Xperia reports its fourth quarter and full year 2024 financial results. I'm filling in today for Mike Eiberk, Xperia's Head of Investor Relations, who is unable to be with us today. With me on today's call are John Kirshner, 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.xperry.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 period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance 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. 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 in our SEC filings, including our most recent Form 10-K and 10-Q, and our Form 10-K for the year ended December 31, 2024, to be filed with the SEC. 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's CEO, John Kirchner.

Thank you, Catherine, and thank you everyone for joining us on our fourth quarter and full year 2024 earnings call. We closed the 24 fiscal year on a strong operational note, making significant strides in our independent media platform strategy across the media platform, pay TV, and connected car markets. From a financial standpoint, we're pleased with the progress of our business transformation and its impact on profitability as we navigate a challenging market environment across our core business. Robert will walk you through the details in just a moment, but let me first touch on a few financial highlights. Revenue in the quarter was $122 million, up 2% from the prior year after adjusting for the divestitures of AutoSense and Perceive. Adjusted EBITDA was $23 million for the quarter, or 19% of revenue, compared to $13 million in the prior year quarter. This growth continues to demonstrate the progress of our business transformation efforts, which for the full year yielded an adjusted EBITDA margin of 15%, more than doubling year over year. From a balance sheet perspective, we finished the year with $131 million of cash and equivalents, which we believe provides solid operating liquidity as we look ahead. Also, We recently completed the refinancing of our $50 million of outstanding debt due this July through a new three-year facility. Looking forward, we remain focused on our three growth solutions where we see strong potential and differentiation. These are connected TV advertising, where we offer our TiVo One monetization platform, that monetizes ad-supported viewing, viewership data, and homepage engagement across smart TVs powered by TiVo and TiVo video over broadband devices. In-Cabin Entertainment, where DTS AutoStage combines radio, internet metadata, and video to enhance the automotive experience while enabling long-term monetization through licensing fees, upselling features, advertising, and data. and TiVo Video Over Broadband, where we offer an industry-leading content-first streaming platform for our customers' IPTV linear video households, as well as broadband-only households, where revenue is primarily generated by monthly subscriptions. We expect each of these markets to continue to grow rapidly over the next several years. As evidenced by our progress during this past year, We believe we are increasingly well positioned to grow our revenue as our footprint in these markets expands over time. Consistent with past communications, our multi-year goal is to drive meaningful revenue growth from over 20 million monetizable endpoints in home and in the car. We've now updated this slide to reflect progress through 2024. Breaking this down in terms of monetization, in homes across Europe and North America, Our goal is a monetizable footprint of at least 7 million active devices, generating 170 million or more of revenue. Additionally, we increased our goal to over 3.2 million IPTV households, contributing over $120 million of revenue. Lastly, we've increased our footprint goal on DTS Auto Stage to over 15 million cars, producing over 20 million in revenue. In summary, we expect that achieving these monetizable endpoint goals, along with building out our monetization platform, would enable Xperia to generate significant growth in 26 and beyond from these categories relative to 2024. Now let me walk you through some of our recent achievements that reflect our progress, as well as outlining what steps we expect to take in 2025. For TiVo OS, we've now exceeded our goal of over 2 million activated devices across Europe, with deployments in each of the five major countries of UK, France, Italy, Germany, and Spain. Importantly, our partner Sharp Home Electronics Company of America started shipping TiVo-powered TVs into the US market at the end of 2024, and these TVs are now available at certain US retailers. As an example, Sharps QLED 4K 55-inch TV powered by TiVo can be found at certain retailers priced as low as $299. We also finished the year with eight TV partners, with Thompson now named as our latest partner, exceeding the year's goal of at least six. Notably, several of our partners are top 10 global TV manufacturers. We began to deploy our TiVo One ad platform during the quarter, which is our cross-screen ad platform for maximizing engagement and monetization on TiVo's independent media platforms, whether in the home or in the car. TiVo One is relevant not only on smart TVs powered by TiVo, but also on TiVo IPTV-based video over broadband boxes, which are connected to and power the user interface of smart TVs. The two platforms are built on a common TiVo best-in-class experience, and further offer the benefit to advertisers of being reachable through a common ad platform. This advances our goals of providing an extraordinary end user experience on smart TVs, along with a highly scalable platform for our advertising and monetization partners as they look to engage with unique audience segments across our footprint, drive viewership, expand reach, and seek flexible advertising solutions. Taken together, The combination of our footprint growth and harmonization of our smart TV and video over broadband footprint through the TiVo One ad platform is expected to set the foundation for monetization growth as we move through 2025. One important ad unit that delivers unique reach and brings a valuable presence is the homepage across connected TVs. Advertising clients recognize that the homepage is a key, common, and frequent touch point in the consumer entertainment journey, as they seek to find, watch, and enjoy the content they love. Overall, it was a positive quarter of execution for our independent media platform strategy, and we look forward to beginning to turn the corner on monetization growth as we progress through the year. Our connected car business saw continued footprint momentum during the quarter. For DTS Auto Stage, we now have a footprint of over 10 million vehicles, which exceeds our original goal of 7 million. Additionally, by adding a Japanese automotive brand in the quarter, we met our goal of three incremental DTS AutoStage design wins, including one that included video service powered by TiVo. Several new models of AutoStage launched in the quarter from six brands, including BMW, Hyundai, Mercedes, and Nissan. In our HD radio business, our technology is now implemented in more than 110 million vehicles. with penetration approaching 60% of new vehicles in North America. In the quarter, more than 15 automotive brands launched new model lineups with HD Radio, including Mercedes-Benz, Aston Martin, Hyundai, Toyota, Honda, Audi, and Tesla. Additionally, during the quarter, we signed several DTS Audio multi-year minimum guarantee agreements, ensuring the use of our technology over the next several years. Within the pay TV business, our video over broadband or IPTV solution continues to make steady progress, ending 2024 with 2.6 million IPTV subscriber households, exceeding our year end goal of 2.4 million. We signed seven new TiVo broadband customers in the fourth quarter of 2024, exceeding our goal for the year and bringing the total number of operators committed to our broadband only solution to 20. This growth in IPTV subscribers and its related revenue helped to offset the secular decline from our core pay TV solutions. Turning to consumer electronics, we closed several long-term DTS renewals with our customers, including Harman and Yamaha. These illustrate the durability of our core audio technologies, even in an environment where there is meaningful macro uncertainty. Additionally, at CES 2025, DTS Clear Dialogue won three technology and innovation awards from industry-leading publications. We are well underway with commercialization efforts with OEMs while building the IC ecosystem to support the rollout of the product. We've accomplished a lot over the past year in terms of building critical footprint across our growth segments, either meeting or exceeding all key platform growth milestones communicated at the beginning of the year. We believe these milestones are validation of our independent media platform's value proposition to our customers and further demonstrate how Xperia is working to enhance the way people discover, watch, and enjoy their favorite content in the home and on the go. In addition to driving footprint growth, our focus going forward will be to activate TiVo One, our connected monetization platform across smart TVs, video over broadband devices, and connected cars. As we turn to 25, let me provide a few business metrics we'll be using to gauge our progress this year. Thus far, our focus has been on gaining critical mass in terms of initial footprint, and hence we've provided the number of activated devices defined as new users initiating first use of the platform. Going forward, our focus will turn to monetizing this footprint, so we will soon start reporting active users connected to our TiVo One advertising solution, defined as users that have been active by engaging at least once with our platform over the trailing 30-day period. With this background, we aim to achieve the following goals as we exit 2025. In media platform, we have three primary goals. Drive more than 5 million active TiVo 1 devices across Europe and North America. Exit the year with an average ARPU above $10. and sign at least two additional Smart TV partners, bringing our total to 10. In Pay TV, our goals are to activate TiVo 1 across the North America video over broadband footprint and exit the year with at least 3 million IPTV subscriber households. In Connected Car, we target to exit the year with a DTS autostage footprint of over 13 million vehicles. and to initiate monetization on certain auto stage vehicle platforms in North America. By delivering on these goals, we expect to generate meaningful revenue growth for media platforms, connected car, and IPTV in 2025. For this year, we anticipate this growth will be offset by declines in our core business. However, due to continued business transformation efforts, we expect improved profitability and cash flow. As we turn the corner on our expected larger monetization footprint exiting 2025, we anticipate media platform growth to outpace core business declines, resulting in meaningful top-line revenue growth, continued margin expansion, and increased cash flow. With that, I'll turn the call over to Robert to discuss our financials. Robert? Thanks, John.