Xperi Inc 2026 Q2 Earnings Call

Thank you for joining us as Xperi reports its second quarter of 2026 financial results. With me on today's call are Jon Kirchner, Chief Executive Officer, and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there's an earnings presentation on our investor relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. 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, as well as market and industry dynamics 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 discuss today, please refer to the Risk Factors and MD&A sections in our SEC filings, including our Form 10-K for the year ended December 31, 2025, and our Form 10-Q for the quarter ended June 30, 2026, to be filed with the SEC. Please note, 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. Last, a replay of this conference call will be available on our website shortly after the conclusion of this call.

I'll now turn the call over to Xperi's CEO, Jon Kirchner.

Thank you, Sam, and thank you everyone for joining us on our second quarter 2026 earnings call. The results of the second quarter clearly demonstrate strong execution against our strategic plan, including accelerated advertising and related revenue growth of over 50%. We continued to scale our platforms in both the home and automotive markets, which we believe provides sustainable competitive differentiation and drives long-term growth. During the quarter, we continued to expand our TiVo ONE footprint, advanced our advertising capabilities and partner integrations, and saw continued momentum in our growth areas within media platform, connected car, and pay TV. Turning to our financial results for the quarter, we were pleased with our performance. Let me summarize a few of the achievements. Overall revenue grew 8% year-over-year to finish at $114 million. Non-GAAP operating expenses decreased by 6%.

Adjusted EBITDA finished at 21% of revenue, up 7 percentage points from last year. Non-GAAP earnings per share finished at $0.28, more than double last year's number, and the company generated $15 million of operating cash flow. Let me now go through each of our 4 business areas, starting with media platform. TiVo ONE monthly active users totaled 6.3 million at quarter end, representing approximately 70% year-over-year footprint growth. Media platform revenue grew 44% year-over-year, driven primarily by continued progress in advertising and related revenue. The trailing 12-month ARPU for TiVo ONE was $6.70, down slightly from the first quarter as a result of the trailing 12-month footprint growth rate exceeding the revenue growth rate.

We expect ARPU to increase later this year as anticipated advertising and related revenue growth accelerates and continue to expect we will achieve our goal of exiting the year with an ARPU above $10. From an advertising perspective, we successfully executed homepage video campaigns in the U.S. and Europe with global advertising brands ranging from the entertainment, insurance, automotive, and technology industries. We also saw advanced integration of the TiVo ONE ad platform with key partners, including Teads and Kargo, to enable seamless transactions for our unique homepage hero video inventory. Recent industry events continue to reinforce the strategic value of the TV homepage as one of the most important discovery and monetization points in the entertainment ecosystem. The industry increasingly recognizes that TV operating systems, first-party data, and direct access to consumers at the start of their entertainment journey are becoming critical strategic assets.

We believe this dynamic is driving greater interest from advertisers, content owners, and distribution partners in working with independent TV OS platforms like TiVo ONE that can help them reach consumers before viewing decisions are made. We successfully expanded our content with the launch of TiVo Channels, adding free ad-supported local content across more than 20 countries, which we are confident further enhances the consumer experience and supports potential future monetization opportunities. In terms of data related to advertising, we launched a new TiVo viewership and audience insights data solution in the U.K. market, expanding the capabilities we can offer to advertisers and partners. Importantly and separately, in the U.S., we achieved a significant milestone and began licensing listening data and analytics to broadcasters through the Broadcaster Portal product that sits on top of our AutoStage platform.

Given this is advertising and related revenue, we will be classifying it under Media Platform rather than within Connected Car. Moving to Connected Car, the momentum in Connected Car continued with 42% year-over-year footprint growth in the second quarter. We exceeded 17 million cumulative vehicles shipped with DTS AutoStage across 13 automotive brands. BYD joined the AutoStage program as our 14th automotive brand, committing to deploy our audio and video solution across export models in its portfolio. We also expanded DTS AutoStage video powered by TiVo, now available in 100 countries across major OEM brands, including BMW, Mercedes-Benz, and Audi, further establishing AutoStage video as a leading connected car video platform. As previously mentioned in Media Platform, we had an important win for our DTS AutoStage Broadcaster Portal.

Cumulus is one of the largest U.S. broadcasters and operators of AM/FM radio stations and has signed as our first licensed customer. The portal gives broadcasters a clear data-driven view of listener behavior powered by large-scale aggregated in-car listening data. This enables more accurate audience insights, more informed programming decisions, and stronger alignment with advertiser needs. In another win supporting the long-term adoption of our technologies, we signed a multiyear HD Radio program with a large Asian tier 1 supplier to enable future HD Radio shipment growth. Additionally, automotive brands including BMW, Toyota, Mercedes-Benz, and Volkswagen launched new vehicle models with HD Radio in the United States, Canada, and Mexico. Moving to our pay-TV business. As noted earlier, our IPTV subscriber household base continued to grow, reaching 3.4 million global IPTV subscriber households at quarter end, representing 13% year-over-year growth.

We also expanded our advertising reach by executing a partnership for programmatic dynamic ad insertion with NCTC, with three of its members, Summit Broadband, EPB, and Buckeye, adopting TiVo as their platform. In addition, we signed three new operators for TiVo managed service IPTV and closed multiple renewals across our IPTV and discovery solutions, demonstrating continued partner commitment to the TiVo platform. Importantly, as operators increasingly look to build their business across the broadband spectrum, they are looking for video solutions that help drive customer retention and enhance their offerings with lighter and different bundles of content from their historical pay-TV solutions. TiVo has continued to achieve wins with operators as we've developed a range of solutions to meet their needs. This will continue to drive IPTV and broadband-related growth in the pay-TV business. Moving to our consumer electronics business.

During the quarter, we continued to secure renewals and commitments that support the ongoing adoption of our consumer audio technologies. We closed a multiyear renewal for DTS audio solutions, including new commitments for DTS Clear Dialogue across multiple TV and PC brands. We also renewed DTS agreements with leading TV, audio, and video receiver brands, including Sony, Yamaha, Pioneer, and Insignia. In addition, we renewed DTS agreements for PC and mobile devices with MSI and Realtek. Overall, these renewals reflect our strong market position with unique audio technologies across a broad range of consumer electronics categories. As we look at our progress against the 2026 growth goals we outlined earlier this year, we remain encouraged by the trajectory of the business. TiVo One monthly active users reached 6.3 million at quarter end, closing in on our target of more than seven million by year end.

Media Platform revenue again grew at a very strong rate of 44%, reflecting continued progress in advertising and related revenue as our footprint scales and our product capabilities expand. In Connected Car, AutoStage continued to exceed our original footprint goals, and the addition of BYD as our 14th automotive brand further expands the long-term opportunity for our Connected Car platform. Importantly, we're also beginning to see tangible evidence of demand for the data and analytics capabilities as demonstrated by our first customer for the AutoStage Broadcaster Portal. Taken together, our second quarter progress reinforces our confidence in the strategic direction of the business and our ability to execute against our goals for the year. Let me now turn the call over to Robert to discuss our financial results in more detail.

Robert? Thanks, Jon. Let me start by reviewing the revenue results for the quarter.