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    Xperi (XPER)

    XPER Q2 2024: Robust AutoStage pipeline intact, adds video partner

    Reported on Aug 5, 2024 (After Market Close)
    Pre-Earnings Price$7.23Last close (Aug 5, 2024)
    Post-Earnings Price$7.30Open (Aug 6, 2024)
    Price Change
    $0.07(+0.97%)

    What went well

    • Robust AutoStage and Auto-related pipeline: Management noted they are working with a very robust pipeline for AutoStage audio and video, with no unexpected delays and strong potential for driving both license fee and ad-based revenue as automotive programs expand.
    • Positive early traction in TiVo OS deployments: Executives highlighted strong consumer engagement and accelerated TiVo OS activations—especially in Europe—with clear progress toward achieving 2 million active devices by year-end, signaling future monetization potential.
    • Long-term visibility from multiyear partnerships: The company’s strategy of securing multiyear deals, including in Consumer Electronics and automotive, builds long-term customer relationships that can drive recurring revenue and reduce revenue volatility over time.

    What went wrong

    • Consumer Electronics Volatility: In the Q&A, executives noted that the CE business is influenced by multiyear deals that create revenue spikes followed by quieter periods, which could lead to near-term revenue weakness and uncertainty in growth for 2025.
    • Uncertain TiVo OS Adoption: The discussion on TiVo OS highlighted that while there is pipeline activity and ongoing OEM discussions, significant deals are still in progress with timelines extending into 2025, posing execution and adoption risks in North America.
    • Delayed Automotive Video Monetization: On the automotive front, executives indicated that video initiatives may see staggered adoption—with some OEMs targeting updates only 2–3 years down the road—raising concerns about slower near-term revenue recognition from these programs.

    Q&A Summary

    1. AutoStage Pipeline
      Q: Are AutoStage deals on track for year-end?
      A: Management is confident with a robust pipeline, and no deals were unexpectedly delayed, indicating they expect to hit their year-end metrics.

    2. OEM Pipeline
      Q: What is the status of U.S. TiVo OS pipeline?
      A: They are building a U.S. pipeline with one signed OEM and expect further opportunities to solidify their market presence in 2025.

    3. OEM Signing
      Q: How advanced is the OEM signing process?
      A: Engagements remain strong, with ongoing discussions among potential partners, ensuring a growing pipeline as current OEMs ramp up their volumes.

    4. Consumer Electronics
      Q: What’s the CE outlook for 2025?
      A: Despite current lumpiness from multiyear deals, management expects lower single-digit growth in consumer electronics once revenue normalizes in 2025.

    5. TiVo OS Learnings
      Q: What are early TiVo OS learnings?
      A: The focus is on maximizing customer satisfaction and engagement through effective partner support, which is crucial for long-term monetization.

    6. TiVo Engagement
      Q: Are TiVo OS devices engaging consumers?
      A: Early activation data is encouraging, indicating solid consumer engagement that bodes well for future monetization efforts.

    7. Video Adoption
      Q: How is the market for AutoStage video shaping?
      A: Conversations with major automakers are positive, and management anticipates adding one more video customer by year-end.

    8. Auto Competition
      Q: Is the auto market becoming more competitive?
      A: Despite some softness from major players, the AutoSense program continues to perform strongly in the competitive automotive environment.

    9. DTS Codec
      Q: Is the DTS codec use-case video or music?
      A: The codec is used primarily for video applications.

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