Xperi Inc. [XPER] Filings

10-Q 1 xper-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-41486

XPERI INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		83-4470363
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2190 Gold Street, San Jose, California		95002
(Address of Principal Executive Offices)		(Zip Code)

(408) 519-9100

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    Common Stock (par value $0.001 per share)

    XPER

    New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of July 30, 2024 was 45,806,972.

XPERI INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

TABLE OF CONTENTS


		Page
	Note About Forward-Looking Statements	3

	PART I
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	5
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7
	Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2024 and 2023	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

	PART II
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40

Signatures		41

Note About Forward-Looking Statements

This quarterly report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, growth rate, competitiveness, gross margins, levels of research, development and other related costs, expenditures, the outcome or effects of and expenses related to litigation and administrative proceedings, tax expenses, cash flows, our management’s plans and objectives for our current and future operations, the levels of customer spending or research and development activities, general economic conditions, the impact of any acquisitions or divestitures on our financial condition and results of operations, and the sufficiency of financial resources to support future operations and capital expenditures.

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” in our Form 10-K and other documents we file from time to time with the U.S. Securities and Exchange Commission (“SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	119,591		$	126,872		$	238,435		$	253,711
Operating expenses:
Cost of revenue, excluding depreciation and amortization of intangible assets		28,953			30,856			58,709			58,648
Research and development		45,123			55,701			95,562			110,557
Selling, general and administrative		53,102			56,497			109,455			114,273
Depreciation expense		3,278			4,202			6,862			8,295
Amortization expense		11,042			14,798			22,081			29,625
Impairment of long-lived assets		—			—			—			1,096
Total operating expenses		141,498			162,054			292,669			322,494
Operating loss		(21,907	)		(35,182	)		(54,234	)		(68,783	)
Interest and other income, net		1,290			1,658			2,332			2,766
Interest expense - debt		(748	)		(750	)		(1,496	)		(1,490	)
Gain on divestiture		—			—			22,934			—
Loss before taxes		(21,365	)		(34,274	)		(30,464	)		(67,507	)
Provision for income taxes		9,266			5,090			13,538			4,796
Net loss		(30,631	)		(39,364	)		(44,002	)		(72,303	)
Less: net loss attributable to noncontrolling interest		(332	)		(969	)		(583	)		(1,908	)
Net loss attributable to the Company	$	(30,299	)	$	(38,395	)	$	(43,419	)	$	(70,395	)
Net loss per share attributable to the Company - basic and diluted	$	(0.67	)	$	(0.90	)	$	(0.97	)	$	(1.66	)
Weighted-average number of shares used in net loss per share calculations - basic and diluted		45,331			42,770			44,926			42,499

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net loss	$	(30,631	)	$	(39,364	)	$	(44,002	)	$	(72,303	)
Other comprehensive loss:
Change in foreign currency translation adjustment		59			(521	)		(325	)		92
Unrealized (loss) gain on cash flow hedges		(396	)		(10	)		(1,187	)		853
Comprehensive loss		(30,968	)		(39,895	)		(45,514	)		(71,358	)
Less: comprehensive loss attributable to noncontrolling interest		(332	)		(969	)		(583	)		(1,908	)
Comprehensive loss attributable to the Company	$	(30,636	)	$	(38,926	)	$	(44,931	)	$	(69,450	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)


	June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	92,481		$	142,085
Accounts receivable, net		56,866			55,984
Unbilled contracts receivable, net		80,679			64,114
Prepaid expenses and other current assets		36,365			38,874
Assets held for sale		—			15,860
Total current assets		266,391			316,917
Note receivable, noncurrent		28,571			—
Deferred consideration from divestiture		6,267			—
Unbilled contracts receivable, noncurrent		23,504			18,231
Property and equipment, net		42,241			41,569
Operating lease right-of-use assets		34,756			39,900
Intangible assets, net		184,898			206,895
Deferred tax assets		4,950			5,093
Other noncurrent assets		27,669			32,781
Assets held for sale, noncurrent		—			12,249
Total assets	$	619,247		$	673,635
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	14,314		$	20,849
Accrued liabilities		90,469			109,961
Deferred revenue		27,728			28,111
Liabilities held for sale		—			6,191
Total current liabilities		132,511			165,112
Long-term debt		50,000			50,000
Deferred revenue, noncurrent		22,455			19,425
Operating lease liabilities, noncurrent		24,401			30,598
Deferred tax liabilities		7,003			6,983
Other noncurrent liabilities		12,797			4,577
Liabilities held for sale, noncurrent		—			9,805
Total liabilities		249,167			286,500
Commitments and contingencies (Note 13)
Equity:
Preferred stock: $0.001 par value; 6,000 shares authorized as of June 30, 2024 and December 31, 2023; no shares issued and outstanding as of June 30, 2024 and December 31, 2023		—			—
Common stock: $0.001 par value; 140,000 shares authorized as of June 30, 2024 and December 31, 2023; 45,746 and 44,211 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		46			44
Additional paid-in capital		1,241,931			1,212,501
Accumulated other comprehensive loss		(4,377	)		(2,865	)
Accumulated deficit		(848,867	)		(805,448	)
Total Company stockholders’ equity		388,733			404,232
Noncontrolling interest		(18,653	)		(17,097	)
Total equity		370,080			387,135
Total liabilities and equity	$	619,247		$	673,635

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(44,002	)	$	(72,303	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain from divestiture		(22,934	)		—
Depreciation of property and equipment		6,862			8,295
Amortization of intangible assets		22,081			29,625
Stock-based compensation expense		30,060			34,059
Impairment of long-lived assets		—			1,096
Deferred income taxes		163			(736	)
Other		(2,001	)		(105	)
Changes in operating assets and liabilities:
Accounts receivable		(2,903	)		(11,480	)
Unbilled contracts receivable		(22,027	)		(7,324	)
Prepaid expenses and other assets		4,909			1,106
Accounts payable		(5,360	)		(4,691	)
Accrued and other liabilities		(19,404	)		(20,428	)
Deferred revenue		2,635			(1,743	)
Net cash used in operating activities		(51,921	)		(44,629	)
Cash flows from investing activities:
Purchases of property and equipment		(2,307	)		(2,470	)
Capitalized internal-use software		(5,825	)		(3,638	)
Purchases of intangible assets		(84	)		(91	)
Net cash used in divestiture		(227	)		—
Net cash used in investing activities		(8,443	)		(6,199	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock purchase plan		4,328			5,850
Withholding taxes related to net share settlement of equity awards		(5,929	)		(3,127	)
Net cash (used in) provided by financing activities		(1,601	)		2,723
Effect of exchange rate changes on cash and cash equivalents		12			137
Net decrease in cash and cash equivalents		(61,953	)		(47,968	)
Cash and cash equivalents at beginning of period (1)		154,434			160,127
Cash and cash equivalents at end of period	$	92,481		$	112,159
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	9,204		$	10,109
Interest paid	$	1,504		$	1,496
Supplemental disclosure of noncash investing and financing activities:
Note receivable in exchange for consideration from divestiture	$	27,676		$	—
Deferred consideration from divestiture	$	5,854		$	—
Costs capitalized for internal-use software included in accrued liabilities	$	743		$	—

(1)

Includes $12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)


Three Months Ended June 30, 2024	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount		Capital			Loss			Deficit			Interest			Equity
Balances at April 1, 2024		45,031	$	45	$	1,221,709		$	(4,040	)	$	(818,568	)	$	(17,389	)	$	381,757
Change in ownership interest of the Company		—		—		932			—			—			(932	)		—
Vesting of restricted stock units, net of tax withholding		137		—		(340	)		—			—			—			(340	)
Issuance of common stock under employee stock purchase plan		578		1		4,327			—			—			—			4,328
Stock-based compensation		—		—		15,303			—			—			—			15,303
Foreign currency translation adjustment		—		—		—			59			—			—			59
Unrealized loss on cash flow hedges		—		—		—			(396	)		—			—			(396	)
Net loss		—		—		—			—			(30,299	)		(332	)		(30,631	)
Balances at June 30, 2024		45,746	$	46	$	1,241,931		$	(4,377	)	$	(848,867	)	$	(18,653	)	$	370,080


Six Months Ended June 30, 2024	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount		Capital			Loss			Deficit			Interest			Equity
Balances at January 1, 2024		44,211	$	44	$	1,212,501		$	(2,865	)	$	(805,448	)	$	(17,097	)	$	387,135
Change in ownership interest of the Company		—		—		973			—			—			(973	)		—
Vesting of restricted stock units, net of tax withholding		957		1		(5,930	)		—			—			—			(5,929	)
Issuance of common stock under employee stock purchase plan		578		1		4,327			—			—			—			4,328
Stock-based compensation		—		—		30,060			—			—			—			30,060
Foreign currency translation adjustment		—		—		—			(325	)		—			—			(325	)
Unrealized loss on cash flow hedges		—		—		—			(1,187	)		—			—			(1,187	)
Net loss		—		—		—			—			(43,419	)		(583	)		(44,002	)
Balances at June 30, 2024		45,746	$	46	$	1,241,931		$	(4,377	)	$	(848,867	)	$	(18,653	)	$	370,080

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)


Three Months Ended June 30, 2023	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount		Capital			Loss			Deficit			Interest			Equity
Balances at April 1, 2023		42,497	$	42	$	1,149,370		$	(2,643	)	$	(700,835	)	$	(15,360	)	$	430,574
Vesting of restricted stock units, net of tax withholding		72		—		(210	)		—			—			—			(210	)
Issuance of common stock under employee stock purchase plan		644		1		5,849			—			—			—			5,850
Stock-based compensation		—		—		18,091			—			—			—			18,091
Foreign currency translation adjustment		—		—		—			(521	)		—			—			(521	)
Unrealized loss on cash flow hedges		—		—		—			(10	)		—			—			(10	)
Net loss		—		—		—			—			(38,395	)		(969	)		(39,364	)
Balances at June 30, 2023		43,213	$	43	$	1,173,100		$	(3,174	)	$	(739,230	)	$	(16,329	)	$	414,410


Six Months Ended June 30, 2023	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares		Amount		Capital			Loss			Deficit			Interest			Equity
Balances at January 1, 2023		42,066	$	42	$	1,136,330		$	(4,119	)	$	(668,835	)	$	(14,432	)	$	448,986
Change in ownership interest of the Company		—		—		(11	)		—			—			11			—
Vesting of restricted stock units, net of tax withholding		503		—		(3,127	)		—			—			—			(3,127	)
Issuance of common stock under employee stock purchase plan		644		1		5,849			—			—			—			5,850
Stock-based compensation		—		—		34,059			—			—			—			34,059
Foreign currency translation adjustment		—		—		—			92			—			—			92
Unrealized gain on cash flow hedges		—		—		—			853			—			—			853
Net loss		—		—		—			—			(70,395	)		(1,908	)		(72,303	)
Balances at June 30, 2023		43,213	$	43	$	1,173,100		$	(3,174	)	$	(739,230	)	$	(16,329	)	$	414,410

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

XPERI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Xperi Inc. (“Xperi” or the “Company”) is a leading consumer and entertainment technology company. The Company creates extraordinary experiences at home and on the go for millions of consumers around the world, enabling audiences to connect with content in a way that is more intelligent, immersive, and personal. Powering smart devices, connected cars, entertainment experiences and more, the Company brings together ecosystems designed to reach highly-engaged consumers, allowing it and its ecosystem partners to uncover significant new business opportunities, now and in the future. The Company’s technologies are integrated into consumer devices and a variety of media platforms worldwide, driving increased value for its partners, customers, and consumers. The Company operates in one reportable business segment and groups its business into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform.

Xperi Spin-Off

In June 2020, Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”) announced plans to separate into two independent publicly-traded companies (the “Separation”), one comprising its intellectual property (“IP”) licensing business and one comprising its product business (“Xperi Product”). On October 1, 2022 (the “Separation Date”), the Former Parent completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all the outstanding common stock of its product-related business (formerly known as Xperi Product, and hereinafter “Xperi Inc.,” “Xperi” or the Company to the stockholders of record of the Former Parent as of the close of business on September 21, 2022, the record date (the “Record Date”) for the Distribution. Each Former Parent stockholder of record received four shares of Xperi common stock, $0.001 par value, for every ten shares of the Former Parent’s common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date. As a result of the Distribution, Xperi became an independent, publicly-traded company and its common stock is listed under the symbol “XPER” on the New York Stock Exchange. In connection with the Separation and the Distribution, the Former Parent was renamed and continues as Adeia Inc. and also changed its stock symbol to “ADEA” on the Nasdaq Global Select Market.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries, as well as an entity in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.

In the fourth quarter of 2018, the Company funded a new subsidiary, Perceive Corporation (“Perceive”), which was created to focus on edge inference hardware and software technologies. As of June 30, 2024, the Company owned approximately 76.2% of the outstanding equity interest of Perceive.

Unaudited Interim Financial Statements

The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. The amounts as of December 31, 2023 have been derived from the Company’s annual audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 1, 2024 (the “Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Form 10-K.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require management’s most significant, challenging, and subjective judgment include the estimation of licensees’ quarterly royalties prior to receiving the royalty reports, the determination of stand-alone selling price and the transaction price in an arrangement with multiple performance obligations, the fair value of note receivable and deferred consideration in connection with the Divestiture (as described in Note 6—Divestiture), capitalization of internal-use software, loss contingencies related to indemnification liability, the assessment of useful lives and recoverability of other intangible assets and long-lived assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and valuation of performance-based awards with a market condition. Actual results experienced by the Company may differ from management’s estimates.

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable, unbilled contracts receivable, a note receivable and deferred consideration from divestiture. The Company maintains cash and cash equivalents with large financial institutions, and at times, the deposits may exceed the federally insured limits. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. In addition, the Company has cash and cash equivalents held in international bank accounts that are denominated in various foreign currencies, and has established risk management strategies designed to minimize the impact of certain currency exchange rate fluctuations.

The Company believes that any concentration of credit risk in its accounts receivable and unbilled contracts receivable are substantially mitigated by its evaluation processes and the high level of credit worthiness of its customers. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral.

There was one individually significant customer with revenue exceeding 10% of total revenue for the three months ended June 30, 2024, whereas no single customer exceeded 10% of total revenue in all other comparative periods presented. As of June 30, 2024 and December 31, 2023, no single customer represented 10% or more of the Company’s net balance of accounts receivable.

As described in Note 6, in the first quarter of 2024, the Company received a note receivable and deferred consideration from Tobii AB (“Tobii”) as part of the consideration for divesting its AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”). Both of these instruments are potentially exposed to credit risk arising from default on repayment from Tobii. The credit risk associated with the note receivable is mitigated by establishing a floating lien and security interest in certain of Tobii’s assets, rights, and properties, whereas the deferred consideration is not secured by any collateral. The Company uses certain techniques, such as internally generated cash flow projections on the principal and interest of each instrument, to determine the likelihood that the note receivable or deferred consideration will be repaid. Further, the Company assesses each instrument for credit losses and provides a reserve when full payment on the instruments may not occur as expected. Based on the results of the internally generated cash flow projections, the Company expects Tobii to make full payment on both instruments in accordance with the underlying agreement. Accordingly, no allowance for credit losses was recorded as of June 30, 2024.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires significant segment expenses and other segment related items to be disclosed on an interim and annual basis. The new disclosure requirements are also applicable to companies with a single reportable segment. This guidance is effective on a retrospective basis for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. This guidance is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

NOTE 2 – REVENUE

Revenue Recognition

General

Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, which may include various combinations of goods and services which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of sales taxes collected from customers which are subsequently remitted to governmental authorities.

Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative standalone selling price (“SSP”) basis. The determination of SSP considers market conditions, the size and scope of the contract, customer and geographic information, and other factors. When observable prices are not available, SSP for separate performance obligations is generally based on the cost-plus-margin approach, considering overall pricing objectives.

When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of technology or when a license of technology is the predominant item to which the variable consideration relates, revenue is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the sales-based or usage-based royalty has been allocated has been satisfied or partially satisfied.

Description of Revenue-Generating Activities

The Company derives the majority of its revenue from licensing its technologies and solutions to customers within the Pay-TV, Consumer Electronics, Connected Car and Media Platform product categories. Refer to Part I, Item 1 of the Form 10-K for detailed information regarding these product categories.

Pay-TV

Customers within the Pay-TV category are primarily multi-channel video service providers, consumer electronics (“CE”) manufacturers, and end consumers. Revenue in this category is primarily derived from licensing the Company’s Pay-TV solutions, including Electronic Program Guides, TiVo video-over-broadband (“IPTV”) Solutions, Personalized Content Discovery and enriched Metadata.

For these solutions, the Company provides on-going media or data delivery, either via on-premise licensed software, hosting or access to its platform. The Company generally receives fees on a per-subscriber per-month basis or as a monthly fee, and revenue is recognized during the month in which the solutions are provided to the customer. For most of the on-premise licensed software arrangements, substantially all functionality is obtained through the Company’s frequent updating of the technology, data and content. In these instances, the Company typically has a single performance obligation related to these ongoing activities in the underlying arrangement, and revenue is generally recognized over the period the solution is provided. There are certain fixed fee on-premise licensed software arrangements where revenue is recognized immediately upon the delivery of the licensed technology. Hosted solutions and access to our platform is considered a single performance obligation with revenue being recognized over the period the solution is provided.

Consumer Electronics

The Company licenses its audio technologies to CE manufacturers or their supply chain partners.

The Company generally recognizes royalty revenue from licenses based on units shipped or manufactured. Revenue is recognized in the period in which the customer’s sales or production are estimated to have occurred. This may result in an adjustment to revenue when actual sales or production are subsequently reported by the customer, generally in the month or quarter following sales or production. Estimating customers’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.

Certain customers enter into fixed fee or minimum guarantee agreements, whereby customers pay a fixed fee for the right to incorporate the Company’s technology in the customer’s products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the technology and begins to benefit from the license. If applicable, revenue is recognized net of the effect of any significant financing components calculated using customer-specific, risk-adjusted lending rates, with the related interest income being recognized over time on an effective rate basis. For minimum guarantee agreements where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it estimates the customer will exceed the minimum and adjusts the revenue based on actual usage once that is reported by the customer.

Connected Car

The Company licenses its digital radio solutions, automotive infotainment and related offerings to automotive manufacturers or their supply chain partners.

The Company generally recognizes royalty revenue from these licenses based on units shipped or manufactured, similar to the revenue recognition described above in “Consumer Electronics”. Certain customers may enter into fixed fee or minimum guarantee agreements, also similar to the revenue recognition described above in “Consumer Electronics”. Automotive infotainment and related revenue is generally recognized over time as the customer obtains access to the solutions and underlying data.

Media Platform

The Company generates revenue from advertising, TV viewership data, and licensing of the Vewd app framework and core middleware solutions.

Advertising revenue is generally recognized when the related advertisement is provided. TV viewership data revenue is generally recognized over time as the customer obtains the underlying data. License revenue for the Vewd solutions is generally recognized either on a per-unit royalty or a minimum guarantee or fixed fee basis, similar to as described in the “Consumer Electronics” section above.

Hardware Products, Services and Settlements/Recoveries

The Company sells hardware products, primarily to end consumers, within the Pay-TV, Media Platform, and Consumer Electronics product categories. Hardware product revenue is generally recognized when the promised product is delivered.

The Company also generates non-recurring engineering (“NRE”) revenue within all of its product categories. The Company recognizes NRE revenue as progress is made toward completion, generally using an input method based on the ratio of costs incurred to date to total estimated costs of the project.

Revenue from each of advertising, NRE services, and hardware products was less than 10% of total revenue for all periods presented.

The Company actively monitors and enforces its technology licenses, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s technologies without a license. As a result of these activities, the Company may, from time to time, recognize revenue from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, or from legal judgments in a license dispute. These settlements and recoveries may cause revenue to be higher than expected during a particular reporting period and such settlements and recoveries may not occur in subsequent periods. The Company recognizes revenue from

settlements and recoveries when a binding agreement has been executed or a revised royalty report has been received and the Company concludes collection is probable.

Disaggregation of Revenue

The Company’s revenue that is recognized over time consists primarily of per unit royalties, per-subscriber per-month or monthly license fees, single performance obligations satisfied over time, and NRE services. Revenue that is recognized at a point in time consists primarily of fixed fee or minimum guarantee licensing contracts, hardware products, advertising and settlements/recoveries.

The following table summarizes revenue by timing of recognition (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Recognized over time	$	87,173	$	98,870	$	183,855	$	199,083
Recognized at a point in time		32,418		28,002		54,580		54,628
Total revenue	$	119,591	$	126,872	$	238,435	$	253,711

The following table summarizes revenue by product category (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Pay-TV	$	60,752	$	58,031	$	117,558	$	118,325
Consumer Electronics		17,164		31,716		43,292		68,451
Connected Car		31,423		23,474		55,771		44,022
Media Platform		10,252		13,651		21,814		22,913
Total revenue	$	119,591	$	126,872	$	238,435	$	253,711

The following table summarizes revenue by geographic location (in thousands):


	Three Months Ended June 30,
	2024				2023
U.S.	$	55,832	47	%	$	69,133	54	%
Japan		13,873	11			18,566	15
South Korea		16,653	14			6,354	5
Europe and Middle East		9,467	8			8,416	7
Latin America		13,000	11			6,744	5
China		3,545	3			10,527	8
Other		7,221	6			7,132	6
Total revenue	$	119,591	100	%	$	126,872	100	%

	Six Months Ended June 30,
	2024				2023
U.S.	$	115,631	48	%	$	134,292	53	%
Japan		25,910	11			36,061	14
South Korea		23,599	10			14,410	6
Europe and Middle East		22,942	10			18,582	7
Latin America		19,917	8			13,367	5
China		16,332	7			22,037	9
Other		14,104	6			14,962	6
Total revenue	$	238,435	100	%	$	253,711	100	%

A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, Europe, the Middle East, and Latin America, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods.

Contract Balances

Contract Assets

A contract asset represents a right to consideration that is conditional upon factors other than the passage of time. Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where revenue is recognized upon the completion of performance obligations, but in advance of billings. The amount of unbilled contracts receivable may not exceed their net realizable value and is classified as noncurrent if the payments are expected to be received more than one year from the reporting date.

Contract Liabilities

Contract liabilities are mainly comprised of deferred revenue, which arises when cash payments are received in advance of performance obligations being satisfied. Deferred revenue generally consists of prepaid licenses or other fees, amounts received related to NRE services to be performed in the future, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time.

The following table presents additional revenue disclosures (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	6,336	$	5,547	$	13,602	$	12,266
Performance obligations satisfied in previous periods (true ups, recoveries, and settlements) (1)	$	353	$	597	$	3,362	$	(1,285	)

(1) True ups represent the differences between the Company’s quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in the following period. Recoveries represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company’s inquiries or compliance audits. Settlements represent resolutions of litigation or disputes during the period for past royalties owed.

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue associated with certain non-cancelable fixed fee arrangements and engineering services contracts that have not yet been recognized. As of June 30, 2024, the Company’s remaining performance obligations and the period over which they are expected to be recognized were as follows (in thousands):


Year Ending December 31:	Amounts
2024 (remaining 6 months)	$	35,897
2025		37,782
2026		15,669
2027		5,383
2028		3,102
Thereafter		1,991
Total	$	99,824

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,
	2024						2023
	Accounts Receivable			Unbilled Contracts Receivable			Accounts Receivable			Unbilled Contracts Receivable
Beginning balance	$	2,868		$	245		$	2,067		$	350
Provision for credit losses		(856	)		103			186			(25	)
Recoveries/charge-off		(858	)		—			(41	)		—
Ending balance	$	1,154		$	348		$	2,212		$	325

	Six Months Ended June 30,
	2024						2023
	Accounts Receivable			Unbilled Contracts Receivable			Accounts Receivable			Unbilled Contracts Receivable
Beginning balance	$	1,906		$	190		$	1,950		$	369
Provision for credit losses		(58	)		161			322			(44	)
Recoveries/charge-off		(694	)		(3	)		(60	)		—
Ending balance	$	1,154		$	348		$	2,212		$	325

NOTE 3 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

Prepaid expenses and other current assets consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Prepaid expenses	$	22,542	$	19,913
Prepaid income taxes		5,686		4,813
Finished goods inventory		5,043		7,279
Other		3,094		6,869
Total	$	36,365	$	38,874

Property and equipment, net consisted of the following (in thousands):


	June 30, 2024			December 31, 2023
Computer equipment and software	$	54,348		$	52,740
Capitalized internal-use software		17,806			11,224
Office equipment and furniture		11,465			11,074
Building		17,876			17,876
Land		5,300			5,300
Leasehold improvements		13,319			11,758
Construction in progress		326			3,319
Total property and equipment		120,440			113,291
Less: accumulated depreciation and amortization(1)		(78,199	)		(71,722	)
Property and equipment, net	$	42,241		$	41,569

(1)

Includes $2.6 million and $1.6 million as of June 30, 2024 and December 31, 2023, respectively, of accumulated amortization associated with capitalized internal-use software.

The following table summarizes the capitalization and amortization of internal-use software for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Costs capitalized associated with internal-use software	$	3,303	$	1,743	$	6,582	$	3,638
Amortization of capitalized internal-use software		522		468		1,016		560

Accrued liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Employee compensation and benefits	$	26,664	$	44,095
Accrued expenses		18,292		24,307
Current portion of operating lease liabilities		14,739		14,760
Third-party royalties		9,152		8,478
Accrued other taxes		7,765		6,464
Accrued income taxes		7,581		1,991
Other		6,276		9,866
Total	$	90,469	$	109,961

NOTE 4 – FINANCIAL INSTRUMENTS

Non-marketable Equity Securities

As of June 30, 2024 and December 31, 2023, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $4.3 million and $4.9 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three and six months ended June 30, 2024 and 2023.

Derivatives Instruments

The Company uses a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing.

Cash Flow Hedges

The Company designates certain foreign currency forward contracts as hedging instruments pursuant to Accounting Standards Codification (“ASC”) No. 815—Derivatives and Hedging. The effective portion of the gain or loss on the derivatives are reported as a component of accumulated other comprehensive loss (“AOCL”) in stockholders’ equity and reclassified into earnings on the Condensed Consolidated Statements of Operations (Unaudited) in the period upon which the hedged transactions are settled.

The notional and fair values of all derivative financial instruments were as follows (in thousands):


	Location in Balance Sheet	June 30, 2024		December 31, 2023
Derivative instruments designated as cash flow hedges:
Fair value—foreign exchange contract assets, net amount	Prepaid expenses and other current assets	$	—	$	1,184
Fair value—foreign exchange contract liabilities, net amount	Accrued liabilities	$	152	$	—

Notional value held to buy U.S. dollars in exchange for other currencies		$	1,001	$	738
Notional value held to sell U.S. dollars in exchange for other currencies		$	53,146	$	45,468

The Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's Condensed Consolidated Balance Sheets on a net basis.

The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s Condensed Consolidated Balance Sheets were as follows (in thousands):


	June 30, 2024			December 31, 2023
Gross amount of recognized assets	$	268		$	1,300
Gross amount of recognized liabilities		(420	)		(116	)
Net derivative (liabilities) assets	$	(152	)	$	1,184

The changes in AOCL related to the cash flow hedges consisted of the following (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Beginning balance	$	243		$	769		$	1,034		$	(94	)
Other comprehensive (loss) gain before reclassification		(280	)		322			(702	)		1,181
Amounts reclassified from accumulated other comprehensive loss into net loss		(115	)		(332	)		(484	)		(328	)
Net current period other comprehensive (loss) gain		(395	)		(10	)		(1,186	)		853
Ending balance	$	(152	)	$	759		$	(152	)	$	759

The following table summarizes the total gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024		2023
Research and development	$	135		$	403	$	484	$	414
Selling, general and administrative		(24	)		59		83		63
Total	$	111		$	462	$	567	$	477

Undesignated Derivatives

For derivatives that were not designated as hedge instruments, they were measured and reported at fair value as a derivative asset or liability in the Condensed Consolidated Balance Sheets with their corresponding changes in the fair value recognized as gains or losses in interest and other income, net in the Condensed Consolidated Statements of Operations. These instruments were all re-designated as foreign currency cash flow hedges in July 2023.

For the three and six months ended June 30, 2023, gains on the undesignated derivatives were $0.5 million and $0.7 million, respectively.

NOTE 5 – FAIR VALUE

The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:


Level 1	Quoted prices in active markets for identical assets.

Level 2	Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

When applying fair value principles in the valuation of assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs.

The Company’s derivative financial instruments (as described in Note 4—Financial Instruments), consisting of foreign currency forward contracts, are reported at fair value on a recurring basis and classified as Level 2.

Financial Instruments Not Recorded at Fair Value

The following table presents the fair value hierarchy for the Company’s assets and liabilities recorded at their carrying amount, but for which the fair value is disclosed (in thousands):


	June 30, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Note receivable, noncurrent	$	28,571	$	28,571	$	—	$	—
Deferred consideration from divestiture		6,267		5,716		—		—
Total assets	$	34,838	$	34,287	$	—	$	—

Liabilities:
Senior unsecured promissory note	$	50,000	$	49,696	$	50,000	$	49,659

The fair value of the note receivable, including accrued interest, and the deferred consideration resulting from the Divestiture (as described in Note 6—Divestiture) were estimated based on an income and market approach with valuation inputs such as the U.S. Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments. They are classified within Level 2 of the fair value hierarchy.

The fair value of the Company’s debt (as described in Note 8—Debt) was estimated based on an income and market approach with valuation inputs such as the U.S. Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments. The Company classifies its debt within Level 2 of the fair value hierarchy.

NOTE 6 – DIVESTITURE

In December 2023, the Company entered into a definitive agreement with Tobii pursuant to the Divestiture. The Divestiture represented a 100% equity sale transaction of two of the Company’s wholly-owned subsidiaries and was expected to streamline the Company’s business to further focus its business on entertainment-related products and services. All of the assets and liabilities associated with the Divestiture were classified as held for sale as of December 31, 2023.

The Divestiture was completed on January 31, 2024 (the “Closing Date”) for total consideration of $44.3 million, comprising $10.8 million of cash, a note receivable from Tobii (the “Tobii Note”) of $27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $15.0 million, which was estimated to have a fair value of $5.8 million based on a present value factor on the Closing Date. The $10.8 million of cash included in the total consideration represents the cash balance that was transferred to Tobii on the Closing Date to support operations during the transition and was subsequently returned to the Company, and as such, this amount is included in the assets sold as of January 31, 2024 and in the total consideration received. As previously disclosed in the Form 10-K, Tobii was required to pay the Company the acquired closing cash balance, less certain adjustments, promptly after the Closing Date. In addition, there may be potential earnout payments (as described under Contingent Consideration below) payable in 2031, contingent upon the future success of the divested AutoSense in-cabin safety business.

In connection with the Divestiture, the Company also recorded a liability of $7.1 million for potential indemnification of certain pre-Closing matters.

As of the Closing Date, the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):


	January 31, 2024
	Current		Noncurrent		Total
Assets:
Cash and cash equivalents	$	11,025	$	—	$	11,025
Accounts receivable, net		3,392		—		3,392
Unbilled contracts receivable, net		1,398		5,320		6,718
Prepaid expenses and other current assets		812		—		812
Property and equipment, net		—		2,291		2,291
Operating lease right-of-use assets		—		3,272		3,272
Other noncurrent assets		—		2,887		2,887
Total assets held for sale (1)	$	16,627	$	13,770	$	30,397

Liabilities:
Accounts payable	$	248	$	—	$	248
Accrued liabilities		4,933		—		4,933
Deferred revenue		1,114		—		1,114
Operating lease liabilities, noncurrent		—		2,708		2,708
Other noncurrent liabilities		—		7,064		7,064
Total liabilities held for sale	$	6,295	$	9,772	$	16,067

Net assets held for sale	$	10,332	$	3,998	$	14,330

(1)

Total assets held for sale also included certain fully amortized finite-lived intangible assets with an original cost of $35.2 million.

Upon the completion of the Divestiture, the Company recognized a gain of $22.9 million in the first quarter of 2024.

The Divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

Note Receivable from Tobii AB

The Tobii Note, with a fixed interest rate of 8% per annum, matures on April 1, 2029 and is payable in three annual installments. Tobii may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, along with accrued interest, without any penalty. In the event of default, an additional interest of 2% per annum may be applied to the outstanding balance of the Tobii Note, and the Company has the right to demand full or partial payment on the outstanding balance with unpaid interest.

The Tobii Note is secured by a floating lien and security interest in certain of Tobii’s assets, rights, and properties, and contains customary affirmative and negative covenants including the restrictions on incurring certain indebtedness, and certain change of control and asset sale events, but does not include any financial covenants.

The Tobii Note has the following scheduled principal repayments (in thousands):


Date of Principal Payment:	Amount
April 1, 2027	$	10,000
April 1, 2028		10,000
April 1, 2029		7,676
Total principal payments	$	27,676

The Company elected to present accrued interest within the carrying amount of note receivable, noncurrent, in the Condensed Consolidated Balance Sheets. As of June 30, 2024, the carrying amount of the Tobii Note is as follows (in thousands):


	June 30, 2024
Outstanding principal amount	$	27,676
Add: interest accrued to date		895
Carrying amount—note receivable, noncurrent	$	28,571

For the three and six months ended June 30, 2024, the Company recognized interest income of $0.5 million and $0.9 million, respectively.

Deferred Consideration

The deferred consideration consists of guaranteed future cash payments, which are scheduled to be made by Tobii in four annual payments as follows (in thousands):


Date of Payment:	Amount
February 15, 2028	$	3,000
February 15, 2029		2,250
February 15, 2030		4,500
February 15, 2031		5,250
Total future payments	$	15,000

At the Closing Date, there was $9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment. For the three and six months ended June 30, 2024, the Company accreted $0.3 million and $0.4 million of the discount as interest income, respectively.

As of June 30, 2024, the net carrying amount of the deferred consideration is as follows (in thousands):


	June 30, 2024
Total deferred consideration	$	15,000
Less: unamortized discount on deferred consideration		(8,733	)
Net carrying amount	$	6,267

Contingent Consideration

The earnout represents potential incremental cash consideration, and the payment is contingent upon the achievement of certain targeted shipments, between January 1, 2024 and December 31, 2030, of qualified automotive products featuring the AutoSense in-cabin safety technology and the related imaging solutions.

At the Closing Date, the Company elected to apply the gain contingency guidance under ASC 450—Contingencies, as it could not reasonably estimate shipment amounts. As a result, the Company deferred the recognition of the contingent consideration until it becomes realized or realizable.

NOTE 7 – INTANGIBLE ASSETS, NET

Identified intangible assets consisted of the following (in thousands):


	June 30, 2024
	Average Life (Years)	Gross Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Acquired patents	3-10	$	17,281	$	(4,583	)	$	12,698
Existing technology / content database	5-10		219,908		(187,891	)		32,017
Customer contracts and related relationships	3-9		493,579		(377,146	)		116,433
Trademarks/trade name	4-10		39,313		(36,963	)		2,350
Non-compete agreements	1-2		3,101		(3,101	)		—
Total finite-lived intangible assets			773,182		(609,684	)		163,498
Indefinite-lived intangible assets:
TiVo tradename/trademarks	N/A		21,400		—			21,400
Total intangible assets		$	794,582	$	(609,684	)	$	184,898


	December 31, 2023
	Average Life (Years)	Gross Amount		Accumulated Amortization			Net Carrying Value
Finite-lived intangible assets:
Acquired patents	3-10	$	17,281	$	(3,478	)	$	13,803
Existing technology / content database	5-10		219,717		(181,713	)		38,004
Customer contracts and related relationships	3-9		493,685		(365,074	)		128,611
Trademarks/trade name	4-10		39,313		(34,453	)		4,860
Non-compete agreements	1-2		3,101		(2,884	)		217
Total finite-lived intangible assets			773,097		(587,602	)		185,495
Indefinite-lived intangible assets:
TiVo tradename/trademarks	N/A		21,400		—			21,400
Total intangible assets (1)		$	794,497	$	(587,602	)	$	206,895

(1)

Total intangible assets excluded certain finite-lived intangible assets with a gross amount of $35.2 million, which were fully amortized and classified as held for sale as of December 31, 2023 in connection with the Divestiture (as described in Note 6—Divestiture).

As of June 30, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):


Year Ending December 31:	Amounts
2024 (remaining 6 months)	$	21,291
2025		34,826
2026		31,495
2027		30,652
2028		30,315
Thereafter		14,919
Total future amortization	$	163,498

NOTE 8 – DEBT

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, the Company issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in a principal amount of $50.0 million. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, payable in cash on a quarterly basis. If a certain qualified spin-off transaction occurs, the interest rate will be increased to the greater of (a) 6.00% and (b) the sum of (i) the highest interest rate payable under any credit facility or bonds, debentures, notes or similar instruments where the issuer or any guarantor borrows money or guarantees obligations on a secured basis on or after the date of such spin-off transaction, plus (ii) 2.00%. It was determined that the Spin-Off completed on October 1, 2022 did not trigger any change in the interest rate of the debt. The Promissory Note matures on July 1, 2025. The Company may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.

The Promissory Note includes certain covenants that restrict the Company and each guarantor’s ability to, among other things, incur certain indebtedness or engage in any material line of business substantially different from those lines of business conducted by the Company on the closing date of the acquisition. The Promissory Note does not contain any financial covenants.

As of June 30, 2024, $50.0 million in principal balance was outstanding. Interest expense on the Promissory Note was $0.8 million for both the three months ended June 30, 2024 and 2023, and $1.5 million for the both six months ended June 30, 2024 and 2023.

NOTE 9 – NET LOSS PER SHARE

Basic net loss per share attributable to the Company is computed by dividing the net loss attributable to the Company by the number of weighted-average outstanding common shares in the period. Potentially dilutive common shares, such as common shares issuable upon exercise of stock options, vesting of restricted stock units (“RSUs”), and shares purchased under the Employee Stock Purchase Plan (“ESPP”) are typically reflected in the computation of diluted net income per share by application of the treasury stock method. Due to the net losses reported, these potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to the Company, since their effect would be anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share attributable the Company (in thousands, except per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Numerator:
Net loss attributable to the Company - basic and diluted	$	(30,299	)	$	(38,395	)	$	(43,419	)	$	(70,395	)
Denominator:
Weighted-average number of shares used to compute net loss per share attributable to the Company - basic and diluted		45,331			42,770			44,926			42,499
Net loss per share attributable to the Company - basic and diluted	$	(0.67	)	$	(0.90	)	$	(0.97	)	$	(1.66	)

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):


	Three and Six Months Ended June 30,
	2024		2023
Options		57		120
Restricted stock units		7,998		7,345
ESPP		92		83
Total		8,147		7,548

NOTE 10 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Equity Incentive Plans

In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Equity Incentive Plan (the “2022 EIP”).

Under the 2022 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, RSUs, stock appreciation rights, dividend equivalents and performance awards, or any combination thereof.

The 2022 EIP provides for option grants designated as either incentive stock options or non-statutory options. Stock options have been granted with an exercise price not less than the value of the common stock on the grant date, and have 10-year contractual terms from the date of grant, and vest over a four-year period. The vesting criteria for RSUs has historically been the passage of time or meeting certain performance-based objectives, and continued service through the vesting period over three or four years for time-based awards or three years for performance-based awards.

As of June 30, 2024, there were approximately 4.6 million shares reserved for future grants under the 2022 EIP.

Employee Stock Purchase Plans

In connection with the Separation and on October 1, 2022, the Company adopted the Xperi Inc. 2022 Employee Stock Purchase Plan (as amended, the “2022 ESPP”). The 2022 ESPP originally provided consecutive overlapping 24-month offering periods, with four purchase periods that were generally six months in length, commencing on each December 1 and June 1 during the term of the 2022 ESPP. The 2022 ESPP was subsequently amended, and commencing December 1, 2023, the length of the offering periods was reduced from 24 months to 12 months and the employee’s maximum participant contribution was reduced from 100% to 15% of the employee’s after-tax base earnings and commissions up to the limit imposed by the Internal Revenue Service. The accumulated deductions will be applied to the purchase of shares on each semi-annual purchase date. The purchase price per share will equal 85% of the fair market value per share on the start date of the offering period or, if lower, 85% of the fair market value per share on the semi-annual purchase date.

The 2022 ESPP includes a reset provision if the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of the 12-month offering period. Upon occurrence of the reset, the existing offering period will automatically terminate and a new 12-month offering period will begin on the next business day. All participants in the terminated offering will be transferred to the new offering period.

The reset provision under the 2022 ESPP was triggered on May 31, 2024, and it was considered a modification in accordance with ASC 718—Stock Based Compensation, with the incremental fair value of $2.0 million to be recognized on a straight-line basis over the new 12-month offering period.

On May 31, 2024, the Company issued 577,826 shares under the 2022 ESPP, net of shares withheld to satisfy withholding tax requirements for certain employees, for aggregate net proceeds of $4.3 million.

As of June 30, 2024, there were 3.1 million shares reserved for future issuance under the 2022 ESPP.

The following table summarizes the valuation assumptions used in estimating the fair value of the 2022 ESPP for the offering periods in effect using the Black-Scholes option pricing model:


	Six Months Ended June 30,
	2024			2023
Expected life (years)	0.5 — 1.0			0.5 — 2.0
Risk-free interest rate	5.14% — 5.39%			4.33% — 5.44%
Dividend yield		0.00	%		0.00	%
Expected volatility	44.38% — 45.01%			44.11% — 51.19%

Stock Options

Stock option activity for the six months ended June 30, 2024 is as follows (in thousands, except per share amounts):


	Number of Shares Subject to Options			Weighted Average Exercise Price Per Share
Balance at December 31, 2023		106		$	26.87
Options exercised		—		$	—
Options canceled / forfeited / expired		(49	)	$	21.99
Balance at June 30, 2024		57		$	31.10

There were no stock options granted during the six months ended June 30, 2024.

Restricted Stock Units

Information with respect to outstanding RSUs (including both time-based vesting and performance-based vesting) for the six months ended June 30, 2024 is as follows (in thousands, except per share amounts):


	Number of Shares Subject to Time- based Vesting			Number of Shares Subject to Performance- based Vesting			Total Number of Shares			Weighted Average Grant Date Fair Value Per Share
Balance at December 31, 2023		5,396			1,671			7,067		$	15.51
Granted		2,496			670			3,166		$	11.23
Vested / released		(1,468	)		(14	)		(1,482	)	$	14.51
Canceled / forfeited		(562	)		(191	)		(753	)	$	18.27
Balance at June 30, 2024		5,862			2,136			7,998		$	13.74

Performance-Based Awards

From time to time, the Company may grant performance-based restricted stock units (“PSU”) to senior executives, certain employees, and consultants. The value and the vesting of such PSUs are generally linked to one or more performance goals or certain market conditions determined by the Company, in each case on a specified date or dates or over any period or periods determined by the Company, and may range from zero to 200% of the grant. For PSUs subject to market conditions, the fair value per award is fixed at the grant date and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of achievement of the market condition.

The Company uses the closing trading price of its common stock on the date of grant as the fair value of awards or RSUs and PSUs that are based on Company-designated performance targets. For PSUs that are based on market conditions (the “market-based PSUs”), fair value is estimated by using a Monte Carlo simulation on the date of grant.

The following assumptions were used to value the market-based PSUs granted during the period:


	Six Months Ended June 30,
	2024			2023
Expected life (years)		3.0			2.8
Risk-free interest rate		4.21	%		4.54	%
Dividend yield		0.00	%		0.00	%
Expected volatility		43.93	%		49.02	%

Stock-Based Compensation

Total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenue, excluding depreciation and amortization of intangible assets	$	858	$	927	$	1,602	$	1,719
Research and development		5,831		6,405		10,164		11,956
Selling, general and administrative		8,614		10,759		18,294		20,384
Total stock-based compensation expense	$	15,303	$	18,091	$	30,060	$	34,059

Stock-based compensation expense categorized by award type for the three and six months ended June 30, 2024 and 2023 is summarized in the table below (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
RSUs	$	11,160	$	11,609	$	20,345	$	22,364
PSUs		2,775		5,097		7,029		9,322
ESPP		1,368		1,385		2,686		2,373
Total stock-based compensation expense	$	15,303	$	18,091	$	30,060	$	34,059

As of June 30, 2024, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):


	June 30, 2024
	Unrecognized Stock-Based Compensation		Weighted-Average Period to Recognize Expense (in years)
RSUs	$	65,209		2.0
PSUs		18,373		2.0
ESPP		4,932		0.6
Total unrecognized stock-based compensation expense	$	88,514

NOTE 11 – INCOME TAXES

For the three and six months ended June 30, 2024, the Company recorded an income tax expense of $9.3 million and $13.6 million on a pretax loss of $21.4 million and $30.5 million, respectively; which resulted in an effective tax rate of (43.4)% and (44.4)%, respectively. The income tax expense for the three and six months ended June 30, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.

For the three and six months ended June 30, 2023, the Company recorded an income tax expense of $5.1 million and $4.8 million on a pretax loss of $34.3 million and $67.5 million, respectively; which resulted in an effective tax rate of (14.9)% and (7.1)%, respectively. The income tax benefit for the three and six months ended June 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.

As of June 30, 2024, gross unrecognized tax benefits of $16.2 million decreased by $7.4 million compared to December 31, 2023. Of the total decrease, $6.9 million related to the Divestiture completed in January 2024. Of the $16.2 million gross unrecognized tax benefits, $2.2 million would affect the effective tax rate, if recognized. The Company is unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease.

It is the Company’s policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three and six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, accrued interest and penalties were $0.1 million and $0.4 million, respectively.

As of June 30, 2024, the Company’s 2019 through 2024 tax years are generally open and subject to potential examination in one or more jurisdictions. In addition, in the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.

NOTE 12 – LEASES

The Company leases office and research facilities, data centers and office equipment under operating leases with various expiration dates through 2030. Certain leases offer the option to renew for up to ten years and to terminate before the expiration date. Leases with an initial term of 12 months or less are not recorded on the balance sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not included within the lease liability and right-of-use assets calculation.

The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases for previously exited office space. Certain subleases include variable payments for operating costs. The subleases are generally co-terminus with the head lease, or shorter. Subleases do not include any residual value guarantees or restrictions or covenants imposed by the leases. Income from subleases is recognized as a reduction to selling, general and administrative expenses.

Due to the change in how the office facilities were being used, a significant decrease in the expected market price of the operating lease right-of-use (“ROU”) assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate market, the Company recorded impairment charges of $1.1 million in the six months ended June 30, 2023 to reduce the carrying amount of certain operating ROU assets and property and equipment, including related leasehold improvements. There were no impairment charges recorded in the three and six months ended June 30, 2024.

The components of operating lease costs were as follows (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Fixed lease cost (1)	$	4,250		$	5,325		$	8,536		$	10,483
Variable lease cost		896			1,457			1,949			2,944
Less: sublease income		(2,147	)		(2,593	)		(4,078	)		(5,273	)
Total operating lease cost	$	2,999		$	4,189		$	6,407		$	8,154

(1) Includes short-term leases expensed on a straight-line basis.

The following table presents supplemental cash flow information arising from lease transactions (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cash payments included in the measurement of operating lease liabilities	$	4,428	$	5,000	$	8,924	$	10,208
Operating ROU assets obtained in exchange for lease obligations	$	2,024	$	4,013	$	2,024	$	4,013

The weighted-average remaining term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:


	June 30, 2024			December 31, 2023
Weighted-average remaining lease term (in years)		3.05			3.37
Weighted-average discount rate		5.4	%		5.3	%

Future minimum lease payments and related lease liabilities as of June 30, 2024 were as follows (in thousands):


Year Ending December 31:	Operating Lease Payments (1)			Sublease Income			Net Operating Lease Payments
2024 (remaining 6 months)	$	7,840		$	(3,024	)	$	4,816
2025		16,744			(6,333	)		10,411
2026		10,345			(1,563	)		8,782
2027		4,410			(368	)		4,042
2028		2,202			(379	)		1,823
Thereafter		1,232			(291	)		941
Total lease payments		42,773		$	(11,958	)	$	30,815
Less: imputed interest		(3,633	)
Present value of operating lease liabilities	$	39,140

Less: operating lease liabilities, current portion		(14,739	)
Noncurrent operating lease liabilities	$	24,401

(1) Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance, and real estate taxes.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Purchase and Other Contractual Obligations

In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements primarily include unconditional purchase obligations to service providers. As of June 30, 2024, the Company’s total future unconditional purchase obligations were approximately $134.9 million.

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes and amounts to certain of its licensees, customers, and business partners against claims made by third parties arising from the use of the Company's products, intellectual property, services or technologies. The Company cannot reasonably estimate the possible range of losses that may be incurred pursuant to its indemnification obligations, if any. Variables affecting any such assessment include, but are not limited to: the scope of the contractual indemnification obligation; the nature of the third party claim asserted; the relative merits of the third party claim; the financial ability of the third party claimant to engage in protracted litigation; the number of parties seeking indemnification; the nature and amount of damages claimed by the party suing the indemnified party; and the willingness of such party to engage in settlement negotiations. The Company has received requests for indemnification, but to date none has been material and no liability has been recorded in the Company’s financial statements.

As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company believes, given the absence of any such payments in the Company’s history, and the estimated low probability of such payments in the future, that the estimated fair value of these indemnification agreements is not material. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable the Company to recover any payments under the indemnification agreements from its insurers, should they occur.

Contingencies

The Company and its subsidiaries have been involved in litigation matters and claims in the normal course of business. In the past, the Company or its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to determine infringement or validity of intellectual property rights, and to defend themselves or their customers against claims of infringement or breach of contract. The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings to ensure proper and full payment of royalties by licensees under the terms of their license agreements.

An adverse decision in any legal actions could result in a loss of the Company’s proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company’s licensed technology or otherwise negatively impact the Company’s stock price or its business and consolidated financial results. Although considerable uncertainty exists, the Company does not anticipate that the disposition of any of these matters will have a material effect on its business or consolidated financial statements.

NOTE 14 – SUBSEQUENT EVENTS

In February 2024, the Company began to explore strategic alternatives, including, but not limited to, the sale of substantially all the assets of the Perceive subsidiary (the “Perceive Assets”), which had a total carrying value of approximately $7.5 million as of June 30, 2024. The Company concluded that the criteria for presentation of the Perceive Assets as held-for-sale included in ASC 360—Property, Plant and Equipment were met after the balance sheet date of June 30, 2024 but prior to the issuance of these financial statements. Accordingly, the Company plans to reclassify the related Perceive Assets as held-for-sale during the third quarter of 2024. The potential disposition of the Perceive Assets is not considered a strategic shift that will have a major effect on the Company’s consolidated results of operations, and therefore is not considered to be discontinued operations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to promote understanding of our results of operations and financial condition and should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the fiscal year ended December 31, 2023 found in our Form 10-K filed by Xperi Inc. on March 1, 2024 (our “Form 10-K”).

Business Overview

We are a leading consumer and entertainment technology company. We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, enabling audiences to connect with content in a way that is more intelligent, immersive, and personal. Powering smart devices, connected cars, entertainment experiences and more, we bring together ecosystems designed to reach highly-engaged consumers, allowing us and our ecosystem partners to uncover significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and a variety of media platforms worldwide, driving increased value for our partners, customers, and consumers. We operate in one reportable business segment and group our business into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 1,800 employees and more than 35 years of operating experience.

Divestiture

In December 2023, we entered into a definitive agreement with Tobii AB, an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”). The Divestiture was completed in January 2024, which has streamlined our business and further enhanced our focus on entertainment markets.

Results of Operations

The following table presents our historical operating results for the periods indicated as a percentage of revenue:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue		100	%		100	%		100	%		100	%
Operating expenses:
Cost of revenue, excluding depreciation and amortization of intangible assets		24			25			25			23
Research and development		38			44			40			43
Selling, general and administrative		44			44			46			45
Depreciation expense		3			3			3			3
Amortization expense		9			12			9			12
Impairment of long-lived assets		—			—			—			1
Total operating expenses		118			128			123			127
Operating loss		(18	)		(28	)		(23	)		(27	)
Interest and other income, net		1			1			1			1
Interest expense - debt		(1	)		—			(1	)		(1	)
Gain on divestiture		—			—			10			—
Loss before taxes		(18	)		(27	)		(13	)		(27	)
Provision for income taxes		8			4			6			2
Net loss		(26	)%		(31	)%		(19	)%		(29	)%

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Revenue

We derive the majority of our revenue from licensing our technologies and solutions to customers. For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 2—Revenue of the Notes to the Condensed Consolidated Financial Statements (Unaudited).


	Three Months Ended June 30,
	2024		2023		$ Change			% Change
	(dollars in thousands)
Revenue	$	119,591	$	126,872	$	(7,281	)		(6	)%

Revenue decreased by $7.3 million, or 6%, for the three months ended June 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to a decline of $14.6 million in Consumer Electronics revenue as a result of a decline in minimum guarantee (“MG”) revenue driven by the timing and duration of MG contracts that were renewed as well as the Divestiture, and a decrease of $3.4 million in Media Platform revenue driven principally by a decline in advertising revenue from a unique initial ad buy that occurred in 2023. These decreases were partially offset by an increase of $8.0 million in Connected Car revenue due to an increase in MG revenue in audio solutions, which was partially offset by the Divestiture, and an increase of $2.7 million in Pay-TV revenue, driven largely by continued increase in IPTV Solutions revenue and by higher core guide product revenue due to the timing and duration of MG contracts that were renewed, offset by declines in consumer hardware and subscription revenue in the second quarter of 2024.


	Six Months Ended June 30,
	2024		2023		$ Change			% Change
	(dollars in thousands)
Revenue	$	238,435	$	253,711	$	(15,276	)		(6	)%

Revenue decreased by $15.3 million, or 6%, for the six months ended June 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to a decline of $25.2 million in Consumer Electronics revenue due to the Divestiture as well as a decline in MG revenue contracts due to the timing and duration of MG contracts up for renewal and executed, and a decrease of $1.1 million in Media Platform revenue driven principally by lower advertising revenue, which was partially offset by growth in our smart TV application software and middleware platform. These decreases were partially offset by an increase of $11.8 million in Connected Car revenue as the result of MG revenue coupled with settlements executed which was partially offset by the Divestiture, during the first six months of 2024.

Operating Expenses


	Three Months Ended June 30,
	2024		2023		$ Change			% Change
	(dollars in thousands)
Cost of revenue, excluding depreciation and amortization of intangible assets	$	28,953	$	30,856	$	(1,903	)		(6	)%
Research and development		45,123		55,701		(10,578	)		(19	)%
Selling, general and administrative		53,102		56,497		(3,395	)		(6	)%
Depreciation expense		3,278		4,202		(924	)		(22	)%
Amortization expense		11,042		14,798		(3,756	)		(25	)%
Total operating expenses	$	141,498	$	162,054	$	(20,556	)		(13	)%


	Six Months Ended June 30,
	2024		2023		$ Change			% Change
	(dollars in thousands)
Cost of revenue, excluding depreciation and amortization of intangible assets	$	58,709	$	58,648	$	61			0	%
Research and development		95,562		110,557		(14,995	)		(14	)%
Selling, general and administrative		109,455		114,273		(4,818	)		(4	)%
Depreciation expense		6,862		8,295		(1,433	)		(17	)%
Amortization expense		22,081		29,625		(7,544	)		(25	)%
Impairment of long-lived assets		—		1,096		(1,096	)		(100	)%
Total operating expenses	$	292,669	$	322,494	$	(29,825	)		(9	)%

Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings and non-recurring engineering (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended June 30, 2024 was $29.0 million, as compared to $30.9 million in the same period of the prior year, a decrease of $1.9 million, or 6%. The decrease was primarily attributable to lower costs incurred in connection with advertising revenue in the second quarter of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the six months ended June 30, 2024 was $58.7 million, as compared to $58.6 million in the same period of the prior year, an increase of $0.1 million, or 0%. The increase was primarily attributable to higher delivery costs related to an increase in NRE revenue, mostly offset by lower costs incurred in connection with advertising revenue in the first six months of 2024.

Research and Development

Research and development expenses consist primarily of employee-related costs, stock-based compensation expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs. Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.

Research and development expense for the three months ended June 30, 2024 was $45.1 million, as compared to $55.7 million in the same period of the prior year, a decrease of $10.6 million, or 19%. The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the Divestiture, a reduction in expenses in the Perceive subsidiary, decreases in bonuses and contractor expenses, and an increase in capitalized costs for internal-use software in the second quarter of 2024.

Research and development expense for the six months ended June 30, 2024 was $95.6 million, as compared to $110.6 million in the same period of the prior year, a decrease of $15.0 million, or 14%. The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the Divestiture, a reduction in expenses in the Perceive subsidiary, decreases in bonuses and contractor expenses, and an increase in capitalized costs for internal-use software in the first six months of 2024.

Selling, General and Administrative

Selling expenses consist primarily of compensation and related costs (including stock-based compensation expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade show expenses. General and administrative expenses consist primarily of compensation and related costs (including stock-based compensation expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services. Our general and administrative expenses, other than facilities-related expenses and fringe benefits, are not allocated to other expense line items.

Selling, general and administrative expenses for the three months ended June 30, 2024 were $53.1 million, as compared to $56.5 million in the same period of the prior year, a decrease of $3.4 million, or 6%. The decrease was primarily attributable to

reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs in the second quarter of 2024.

Selling, general and administrative expenses for the six months ended June 30, 2024 were $109.5 million, as compared to $114.3 million in the same period of the prior year, a decrease of $4.8 million, or 4%. The decrease was primarily attributable to reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs in the first six months of 2024.

Stock-based Compensation

The following table sets forth our stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenue, excluding depreciation and amortization of intangible assets	$	858	$	927	$	1,602	$	1,719
Research and development		5,831		6,405		10,164		11,956
Selling, general and administrative		8,614		10,759		18,294		20,384
Total stock-based compensation expense	$	15,303	$	18,091	$	30,060	$	34,059

We recognized stock-based compensation expense from restricted stock units and purchases made under our employee stock purchase plan. Stock-based compensation expense decreased by $2.8 million and $4.0 million, or 15% and 12%, for the three and six months ended June 30, 2024 compared to the same periods of the prior year, respectively. The decreases were primarily driven by a lower PSU expense, and reduced employee headcount during the first six months of 2024.

Depreciation Expense

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense for the three months ended June 30, 2024 was $3.3 million, as compared to $4.2 million in the same period of the prior year, a decrease of $0.9 million, or 22%. The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

Depreciation expense for the six months ended June 30, 2024 was $6.9 million, as compared to $8.3 million in the same period of the prior year, a decrease of $1.4 million, or 17%. The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

Amortization Expense

We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense for the three months ended June 30, 2024 was $11.0 million, as compared to $14.8 million in the same period of the prior year, a decrease of $3.8 million, or 25%. The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

Amortization expense for the six months ended June 30, 2024 was $22.1 million, as compared to $29.6 million in the same period of the prior year, a decrease of $7.5 million, or 25%. The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

As a result of intangible assets we acquired in previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years. See Note 7—Intangible Assets, Net of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional detail.

Impairment of Long-Lived Assets

As a result of optimizing our global real estate footprint and subleasing certain offices following the Spin-Off (as defined in Note 1—Description Of Business And Summary Of Significant Accounting Policies), we recorded non-cash impairment charges of $1.1 million to reduce the carrying amount of certain operating lease ROU assets and property and equipment, including related leasehold improvements, during the six months ended June 30, 2023. We determined that we may not be able to fully

recover the carrying amount of the leased offices due to how the offices were being used, a significant decrease in the expected market price of the ROU assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate leasing market.

We did not record any asset impairment charge for the six months ended June 30, 2024.

Gain on Divestiture

As previously disclosed, we completed the Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets. Upon the completion of the Divestiture, we recognized a gain of $22.9 million in the six months ended June 30, 2024. Refer to Note 6—Divestiture of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

Provision for Income Taxes

For the three and six months ended June 30, 2024, we recorded an income tax expense of $9.3 million and $13.6 million on a pretax loss of $21.4 million and $30.5 million, respectively; which resulted in an effective tax rate of (43.4)% and (44.4)%, respectively. The income tax expense for the three and six months ended June 30, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.

For the three and six months ended June 30, 2023, we recorded an income tax expense of $5.1 million and $4.8 million on a pretax loss of $34.3 million and $67.5 million, respectively; which resulted in an effective tax rate of (14.9)% and (7.1)%, respectively. The income tax benefit three and six months ended June 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.

The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that it was unlikely that we would realize our federal, certain state and certain foreign deferred tax assets given the substantial amount of tax attributes that will remain unutilized to offset reversing deferred tax liabilities. We intend to continue maintaining a full valuation allowance on our federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release depends on the level of profitability that we are able to achieve.

Liquidity and Capital Resources

The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the periods presented:


	As of
	June 30, 2024		December 31, 2023
	(dollars in thousands)
Cash and cash equivalents	$	92,481	$	142,085	(1)
Current ratio(2)		2.0		1.9

(1)

Excludes $12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.

(2)

The current ratio is a liquidity ratio that measures our ability to pay short-term obligations or those due within one year. The ratio is calculated by dividing current assets by current liabilities.


	Six Months Ended June 30,
	2024			2023
	(in thousands)
Net cash used in operating activities	$	(51,921	)	$	(44,629	)
Net cash used in investing activities	$	(8,443	)	$	(6,199	)
Net cash (used in) provided by financing activities	$	(1,601	)	$	2,723

Our primary liquidity and capital resources are our cash and cash equivalents on hand. Cash and cash equivalents were $92.5 million at June 30, 2024, a decrease of $61.9 million from $154.4 million, including $12.3 million classified as held for sale in connection with the Divestiture, as of December 31, 2023. This decrease resulted primarily from cash used in operations of $51.9 million, $5.9 million in payments of withholding taxes on net share settlement of equity awards and $8.1 million of capital expenditures and capitalized internal-use software costs, offset by $4.3 million in proceeds from the issuance of common stock under our employee stock purchase plan (“ESPP”).

For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Form 10-K. Our cash requirements have not changed materially since December 31, 2023.

Stock Repurchase Program

In April 2024, our Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of our common stock (the “Program”). Under the Program, we may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program. Since the inception of the Program, we have not repurchased any shares of our common stock. The volume, timing, and manner of any repurchases will be determined at our discretion, subject to general market conditions, as well as our management of capital, general business conditions, other investment opportunities, regulatory requirements, and other factors. We currently expect to fund the repurchase program from cash and cash equivalents and/or future cash flows. The repurchase program does not obligate us to repurchase any specific number of shares of common stock, has no time limit, and may be modified, suspended, or discontinued at any time without notice at the discretion of the Board. Any repurchases under the Program may not enhance the value of our common stock.

Cash Flows from Operating Activities

Net cash used in operating activities was $51.9 million for the six months ended June 30, 2024, primarily due to our net loss of $44.0 million being further adjusted by $42.2 million of changes in operating assets and liabilities, including payment of employee annual bonuses for 2023 performance, and $22.9 million of a non-cash gain recognized from the Divestiture, partially offset by non-cash items such as stock-based compensation expense of $30.1 million, amortization of intangible assets of $22.1 million, and depreciation expense of $6.9 million.

Net cash used in operating activities was $44.6 million for the six months ended June 30, 2023, primarily due to our net loss of $72.3 million being further adjusted by $44.6 million of changes in operating assets and liabilities, partially offset by non-cash items such as depreciation expense of $8.3 million, amortization of intangible assets of $29.6 million, stock-based compensation expense of $34.1 million, an asset impairment charge of $1.1 million, and change in deferred income taxes of $0.7 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $8.4 million and $6.2 million for six months ended June 30, 2024 and 2023, respectively, which was primarily related to capital expenditures and capitalized internal-use software.

Capital Expenditures

Our capital expenditures for property and equipment consist primarily of purchases of computer hardware and software, capitalized internal-use software, information systems, and production and test equipment. We expect capital expenditures in 2024 to be approximately $20.0 million. These expenditures are expected to be paid with existing cash and cash equivalents. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.

Cash Flows from Financing Activities

Net cash used in financing activities was $1.6 million for the six months ended June 30, 2024, due to $5.9 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $4.3 million in proceeds from the issuance of common stock under our ESPP.

Net cash provided by financing activities was $2.7 million for the six months ended June 30, 2023, primarily due to $5.9 million in proceeds from the issuance of common stock under our ESPP, partially offset by the payment of $3.2 million in withholding taxes related to net share settlement of equity awards.

Long-Term Debt

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, of which $50.0 million was outstanding at June 30, 2024. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to potential adjustments as described in Note 8—Debt to the Condensed Consolidated Financial Statements included in this Quarterly Report. The Promissory Note matures on July 1, 2025. We may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.

Short-Term Liquidity/Financings

We believe our current cash and cash equivalents will be sufficient to meet our needs for at least the next 12 months from the issuance date of these financial statements. As the Promissory Note (see “Long-Term Debt”) matures on July 1, 2025, we may access the capital markets for additional funding. As we assess growth strategies, we may need to supplement our cash and cash equivalents with outside sources. As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow as well as our ability to access the capital markets in light of those levels.

Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. Equity or debt financing may not be available when needed or, if available, equity financing may not be on terms satisfactory to us.

We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives. Our access to capital markets may be constrained and our cost of borrowing may increase under certain business and market conditions, and our liquidity is subject to various risks including the risks identified in “Risk Factors” included in Item 1A of our Form 10-K.

Critical Accounting Estimates

During the six months ended June 30, 2024, there were no significant changes in our critical accounting estimates. For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

Recent Accounting Pronouncements

See Note 1—Description of Business and Summary of Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements (Unaudited) included in this Quarterly Report for more information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of our market risk, see Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Change in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during the last fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of our business, we are involved in legal proceedings. In the past, we have litigated to enforce the terms of license agreements, determine infringement or validity of intellectual property rights, and defend ourselves or our customers against claims of infringement or breach of contract. We expect to continue to be involved in similar legal proceedings in the future. Although considerable uncertainty exists, our management does not anticipate that the disposition of these matters will have a material effect on our results of operations, consolidated financial position or liquidity. However, the disposition, costs, or liabilities could be material to our results of operations in the period recognized.

Item 1A. Risk Factors

Except as set forth below, there were no material changes to the risk factors previously disclosed in Part 1, Item 1A. of our Form 10-K, which is incorporated by reference herein.

Our stock repurchase program may not be fully consummated, may not enhance long-term stockholder value, may increase the volatility of our stock prices and, as we implement it, will diminish our cash reserves.

Pursuant to the Program adopted in April 2024, we may repurchase of up to $100.0 million of our common stock, from time to time, through open market purchases, block trades, in privately negotiated transactions, accelerated share repurchase transactions, or by other means. Since the inception of the Program, we have not repurchased any shares of our common stock. The volume, timing, and manner of any repurchases will be determined at our discretion, subject to general market conditions, as well as our management of capital, general business conditions, other investment opportunities, regulatory requirements, and other factors. The Program does not have an expiration date and does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares, or to do so in any particular manner. Further, repurchases under the Program could affect our share trading prices or increase their volatility, and any repurchases will reduce our cash reserves. We are under no legal obligation to repurchase any shares, and if we do not do so or if we commence repurchases and then suspend or terminate them, the trading prices of our stock may decrease and their volatility increase. We did not at June 30, 2024, and we may not in the future, have cash and cash equivalents sufficient to fund all potential repurchases under the Program. Even if we complete the Program, we may not be successful in our goal of enhancing stockholder value. As we use our cash resources in the Program, we have less cash to fund our operations and pursue other opportunities that may provide value to stockholders.

We face risks associated with financial instruments we hold.

We hold financial instruments that potentially subject us to significant concentrations of credit risk, which instruments consist principally of cash and cash equivalents, accounts receivable, unbilled contracts receivable, a note receivable and deferred consideration from the Divestiture. We maintain cash and cash equivalents with large financial institutions, and at times, the deposits have exceeded and may exceed the federally insured limits. Our evaluation process as to accounts receivable and unbilled contracts receivable may fail to detect or prevent credit risks. In addition, in connection with the Divestiture, we hold a $27.7 million note receivable from Tobii, who also owes us $15.0 million in deferred consideration and may become obligated to make earnout payments to us contingent upon the future success of the divested AutoSense in-cabin safety business. The note is payable in three annual installments commencing on April 1, 2027, and matures on April 1, 2029. Payments of the deferred consideration are due in four annual installments commencing in February 2028, and any contingent consideration would be payable in 2031. Accordingly, although we carry the note receivable and the deferred consideration on our balance sheet, we are not entitled to receive any payment associated with these assets in the near term and we face credit risk until the obligations are fully paid. Our receipt of payments for the note receivable, deferred consideration, and any earned contingent consideration will depend on Tobii’s then-available liquidity and capital resources. If we determine it is appropriate to impair any of the financial instruments we hold, our financial position and results of operations would be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Amended and Restated Bylaws

On August 6, 2024, the Board approved and adopted an amendment and restatement of our bylaws (the “Amended and Restated Bylaws”). Among other things, the amendments contained in the Amended and Restated Bylaws:

•

address the universal proxy rules adopted by the U.S. Securities and Exchange Commission by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s nominees unless such person has, or is part of a group that has, complied with Rule 14a-19 under the Exchange Act;

•

update advance notice disclosure requirements in connection with stockholder nominations of directors and submissions of proposals regarding other business at stockholder meetings (other than proposals to be included in our proxy materials pursuant to Rule 14a-8 under the Exchange Act), to:

•

remove the requirement for the notice from stockholders to disclose information about certain performance-related fees; and

•

require the notice from stockholders to include certain information from the stockholder providing notice, beneficial owners on whose behalf notice is made and other participants in the solicitation, and remove the requirement for the notice to include information from persons that are “affiliates” and “associates” of the proposing stockholder;

•

require that a stockholder directly or indirectly soliciting proxies from other stockholders use a proxy card color other than white;

•

update the provision regarding notice of an adjournment of any meeting of stockholders;

•

update the provisions regarding availability of the list of stockholders entitled to vote at a stockholders meeting to align with recent changes to the Delaware General Corporation Law;

•

update the provision specifying who can call a special meeting of the Board;

•

remove the provision regarding approval of loans to officers; and

•

incorporate certain technical, modernizing, clarifying and conforming changes.

The Amended and Restated Bylaws are filed herewith as Exhibit 3.3. The foregoing description of the changes contained in the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, which is incorporated herein by reference.

Severance Agreements and Change in Control Severance Agreements

On August 6, 2024, the Compensation Committee (the “Committee”) of the Board approved, and we have entered into severance agreements (the “Severance Agreements”) and change in control severance agreements (the “Change in Control Severance Agreements,” and together with the Severance Agreements, the “New Agreement”) with certain executive officers, including Robert Andersen and Geir Skaaden. The New Agreements renewed the terms of and replaced the previous respective severance agreements and change in control severance agreements with Messrs. Andersen and Skaaden, which expire on September 29, 2024 (together the “Previous Agreements”). The New Agreements are consistent with the terms of the Previous Agreements and will become effective on September 30, 2024.

Item 6. Exhibits


Exhibit Number		Exhibit Title

3.1		Amended and Restated Certificate of Incorporation of Xperi Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2022).

3.2		Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Xperi Inc., dated May 29, 2024 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 31, 2024).

3.3		Amended and Restated Bylaws of Xperi Inc. (as amended and restated on August 6, 2024).

31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 8, 2024


XPERI INC.

By:		/s/ Robert Andersen
		Robert Andersen Chief Financial Officer