Business Wire | Aug 3, 2021 04:06PM EDT

Xperi Holding Corporation Announces Second Quarter 2021 Results

Aug. 03, 2021

SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 03, 2021--Xperi Holding Corporation (Nasdaq: XPER) (the "Company", "Xperi" or "we") today announced financial results for the second quarter ended June 30, 2021.

"We delivered strong second quarter revenue and earnings driven by certain deals closing earlier than expected and some expenses shifting to later in the year, increasing our visibility to achieve our full year financial outlook," said Jon Kirchner, chief executive officer of Xperi. "Importantly, we continue to make progress on each of our key initiatives in our IP and product segments, and we believe we are increasingly well positioned for growth in both segments."

Second Quarter 2021 Financial Highlights:

* Revenue of $222.3 million. * GAAP loss per share of $(0.01) and non-GAAP earnings per share of $0.61. * Cash Flow from Operations of $56.3 million. * Adjusted Free Cash Flow1 of $56.7 million. * Paid down $50.6 million in debt and repriced remaining debt to lower future borrowing costs. * Bought back $10 million of common stock.

Second Quarter 2021 Business and Recent Operating Highlights:

IP Licensing Business

* Renewed and extended license agreement with Google. * Renewed and extended license agreement with Fox Corporation. * Renewed and extended license agreement with one of the leading Canadian Pay-TV operators.

Product Business

Consumer Experience business highlights:

* Expanded TiVo Stream 4K footprint through additional retail distribution at Best Buy, Target and QVC. * YouTube TV and RCN distributed TiVo Stream 4Ks as part of their marketing efforts to select subscribers. * Expanded content on our TiVo+ ad-supported video service offering, which now includes 160 free ad-supported television (FAST) channels and over 100,000 advertising video on demand (AVOD) assets.

Connected Car business highlights:

* Delivered HD Radio on 15 new 2021 car models in North America. * Engaged with 20 OEMs for DTS AutoStage and 14 OEMs for DTS AutoSense for launches in 2022 through 2026. * Launching DTS AutoSense in BMW vehicles later this summer.

Pay-TV business highlights:

* Signed a license agreement with Hotwire Communications, one of the nation's leading fiber optics telecommunications providers, for the TiVo IPTV platform. * Acquired MobiTV assets to broaden and further solidify TiVo's position in the IPTV Pay-TV market. * Entered into new and more favorable agreements with nearly all MobiTV customers. These customers will benefit from continued investment in the platform and Xperi's commitment to supporting operators with a broad portfolio of IPTV solutions.

Capital Allocation

During the quarter, the Company paid down $50.6 million in debt and repriced the remaining debt, extending the maturity and lowering future borrowing costs. In addition, the Company bought back $10 million of common stock.

On June 15, 2021, the Company paid $5.3 million to stockholders of record on May 25, 2021, for a quarterly cash dividend of $0.05 per share of common stock.

On July 26, 2021, the Board of Directors declared a dividend of $0.05 per share, payable on September 14, 2021, to stockholders of record on August 24, 2021.

Business Outlook

The Company is lowering its interest expense outlook to $39 million from $43 million and reaffirms the remainder of its full year outlook:

FY 2021 GAAP Outlook FY 2021 Non-GAAPCategory Outlook

Revenue $860M to $900M $860M to $900M

COGS $115M to $125M $115M to $125M

Operating Expense excluding COGS^ $760M to $790M $475M to $505M*

Interest Expense ~ $39M ~ $39M

Other Income ~ $4M ~ $4M

Cash Tax (net of refunds) $35M to $38M $35M to $38M

Basic Shares Outstanding 105M 105M

Diluted Shares Outstanding 107M 112M

Operating Cash Flow $180M to $220M $180M to $220M

Adjusted Free Cash Flow^1* N/A $185M to $225M

1 Adjusted Free Cash Flow is defined as Operating Cash Flow, less purchases of property and equipment, plus merger and integration, separation, and severance and retention costs.

*See tables for reconciliation of GAAP to non-GAAP differences.

Conference Call Information

The Company will hold its second quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Tuesday, August 3, 2021. To access the call in the U.S., please dial 800-430-8332, and for international callers, dial +1 323-289-6576. The conference ID is 2203829. All participants should dial in 15 minutes prior to the start of the conference call and can use the conference ID to access the call. The Company also suggests utilizing the webcast link to access the call at Q2 2021 Earnings Call Webcast.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company's current expectations, estimates and projections about the Company's financial results, forecasts, and business outlook, and anticipated growth in the Company's business segments. In this context, forward-looking statements often address expected future business, financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "could," "seek," "see," "will," "may," "would," "might," "potentially," "estimate," "continue," "expect," "target," similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-looking statements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results, such as statements about the anticipated benefits of the transaction. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to: challenges in integration of Xperi and TiVo operations after the merger, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenue, cost savings, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business strategies, and expansion and growth of the Company's businesses; failure to realize the anticipated benefits of the recent merger with TiVo; the Company's ability to implement its business strategy; pricing trends, including the Company's ability to achieve economies of scale; the ability of the Company to retain and hire key personnel; potential adverse reactions or changes to business relationships resulting from the merger with TiVo; uncertainty as to the long-term value of the Company's common stock; legislative, regulatory and economic developments affecting the Company's business; general economic and market developments and conditions; failure to remediate the material weaknesses in our internal control over financial reporting; the evolving legal, regulatory and tax regimes under which the Company operates; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, and natural disasters; the extent to which the COVID-19 pandemic continues to have an adverse impact on our business, results of operations, and financial condition will depend on future developments, including measures taken in response to the pandemic, which are highly uncertain and cannot be predicted; the impact of semiconductor supply chain constraints on our customers; and any plans regarding a potential separation of the combined business. These risks, as well as other risks associated with the business, are more fully discussed in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including the Company's Annual Report on Form 10-K. While the list of factors presented here is, and the list of factors presented in the Company's filings with the SEC are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the Company's consolidated financial condition, results of operations, liquidity or trading price of common stock. The Company does not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

About Xperi Holding Corporation

Xperi invents, develops, and delivers technologies that enable extraordinary experiences. Xperi technologies, delivered via its brands (DTS, HD Radio, IMAX Enhanced, Invensas, TiVo), and by its startup, Perceive, make entertainment more entertaining, and smart devices smarter. Xperi technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for partners, customers and consumers.

Xperi, DTS, IMAX Enhanced, Invensas, HD Radio, Perceive, TiVo and their respective logos are trademarks or registered trademarks of affiliated companies of Xperi Holding Corporation in the United States and other countries. All other company, brand and product names may be trademarks or registered trademarks of their respective companies.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), the Company's earnings release contains non-GAAP financial measures adjusted for either one-time or ongoing non-cash acquired intangibles amortization charges; costs related to actual or planned business combinations including transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; all forms of stock-based compensation; loss on debt extinguishment; expensed debt refinancing costs; realized and unrealized gains or losses on marketable equity securities and associated tax effects. Management believes that the non-GAAP measures used in this release provide investors with important perspectives into the Company's ongoing business and financial performance, and provide a better understanding of our core operating results reflecting our normal business operations. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Our use of non-GAAP financial measures has certain limitations in that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this press release, such as non-GAAP Operating Expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of our non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures in the tables attached hereto. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures. All financial data is presented on a GAAP basis except where the Company indicates its presentation is on a non-GAAP basis.

Set forth below are reconciliations of the Company's reported and forecasted GAAP to non-GAAP financial metrics.

- Tables Follow -

SOURCE: XPERI HOLDING CORP XPER-E

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020Revenue:Licensing, services and $ 218,112 $ 135,996 $ 436,517 $ 253,483 softwareHardware 4,160 1,635 7,351 1,813

Total revenue 222,272 137,631 443,868 255,296

Operating expenses:Cost of licensing, servicesand software revenue, 22,418 8,252 43,832 9,792 excluding depreciation andamortization of intangibleassetsCost of hardware revenue,excluding depreciation and 4,466 1,428 11,182 1,472 amortization of intangibleassetsResearch, development and 54,408 38,227 109,603 66,833 other related costsSelling, general and 67,668 68,195 135,128 104,802 administrativeDepreciation expense 5,514 3,333 11,198 5,062

Amortization expense 52,242 32,044 104,437 54,553

Litigation expense 2,302 3,871 4,835 5,974

Total operating expenses 209,018 155,350 420,215 248,488

Operating income (loss) 13,254 (17,719 ) 23,653 6,808

Interest expense (10,555 ) (6,958 ) (21,868 ) (11,209 )

Other income and expense, 564 578 1,989 1,143 netLoss on debt extinguishment (8,012 ) (8,300 ) (8,012 ) (8,300 )

Loss before taxes (4,749 ) (32,399 ) (4,238 ) (11,558 )

Benefit from income taxes (2,876 ) (9,299 ) (6,891 ) (7,243 )

Net income (loss) $ (1,873 ) $ (23,100 ) $ 2,653 $ (4,315 )

Less: net loss attributable (755 ) (487 ) (1,516 ) (1,038 )to noncontrolling interestNet income (loss) $ (1,118 ) $ (22,613 ) $ 4,169 $ (3,277 )attributable to the CompanyIncome (loss) per shareattributable to theCompany:Basic $ (0.01 ) $ (0.33 ) $ 0.04 $ (0.06 )

Diluted $ (0.01 ) $ (0.33 ) $ 0.04 $ (0.06 )

Weighted average number of 104,906 69,160 104,923 59,462 shares used in per sharecalculations-basicWeighted average number of 104,906 69,160 107,667 59,462 shares used in per sharecalculations-diluted XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)June 30,December 31,2021

2020

ASSETSCurrent assets:Cash and cash equivalents$

128,960

$

170,188

Available-for-sale debt securities70,201

86,947

Accounts receivable, net123,999

115,975

Unbilled contracts receivable, net126,549

132,431

Other current assets70,501

40,763

Total current assets520,210

546,304

Long-term unbilled contracts receivable6,152

6,761

Property and equipment, net65,963

63,207

Operating lease right-of-use assets75,520

80,226

Intangible assets, net908,245

1,004,379

Goodwill851,088

847,029

Other long-term assets149,616

153,270

Total assets$

2,576,794

$

2,701,176

LIABILITIES AND EQUITYCurrent liabilities:Accounts payable$

14,352

$

13,045

Accrued legal fees2,756

5,783

Accrued liabilities90,846

129,035

Current portion of long-term debt, net36,028

43,689

Deferred revenue35,908

33,119

Total current liabilities179,890

224,671

Deferred revenue, less current portion29,285

39,775

Long-term deferred tax liabilities24,441

24,754

Long-term debt, net747,469

795,661

Noncurrent operating lease liabilities61,279

66,243

Other long-term liabilities100,160

98,953

Total liabilities1,142,524

1,250,057

Commitments and contingenciesCompany stockholders' equity:Preferred stock-

-

Common stock112

110

Additional paid-in capital1,303,768

1,268,471

Treasury stock at cost(120,542

)

(77,218

)

Accumulated other comprehensive income299

1,264

Retained earnings257,905

264,250

Total Company stockholders' equity1,441,542

1,456,877

Noncontrolling interest(7,272

)

(5,758

)

Total equity1,434,270

1,451,119

Total liabilities and equity$

2,576,794

$

2,701,176

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited) June 30, December 31, 2021 2020

ASSETSCurrent assets:Cash and cash equivalents $ 128,960 $ 170,188

Available-for-sale debt securities 70,201 86,947

Accounts receivable, net 123,999 115,975

Unbilled contracts receivable, net 126,549 132,431

Other current assets 70,501 40,763

Total current assets 520,210 546,304

Long-term unbilled contracts receivable 6,152 6,761

Property and equipment, net 65,963 63,207

Operating lease right-of-use assets 75,520 80,226

Intangible assets, net 908,245 1,004,379

Goodwill 851,088 847,029

Other long-term assets 149,616 153,270

Total assets $ 2,576,794 $ 2,701,176

LIABILITIES AND EQUITYCurrent liabilities:Accounts payable $ 14,352 $ 13,045

Accrued legal fees 2,756 5,783

Accrued liabilities 90,846 129,035

Current portion of long-term debt, net 36,028 43,689

Deferred revenue 35,908 33,119

Total current liabilities 179,890 224,671

Deferred revenue, less current portion 29,285 39,775

Long-term deferred tax liabilities 24,441 24,754

Long-term debt, net 747,469 795,661

Noncurrent operating lease liabilities 61,279 66,243

Other long-term liabilities 100,160 98,953

Total liabilities 1,142,524 1,250,057

Commitments and contingenciesCompany stockholders' equity:Preferred stock - -

Common stock 112 110

Additional paid-in capital 1,303,768 1,268,471

Treasury stock at cost (120,542 ) (77,218 )

Accumulated other comprehensive income 299 1,264

Retained earnings 257,905 264,250

Total Company stockholders' equity 1,441,542 1,456,877

Noncontrolling interest (7,272 ) (5,758 )

Total equity 1,434,270 1,451,119

Total liabilities and equity $ 2,576,794 $ 2,701,176

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Six Months EndedJune 30, 2021June 30, 2020Cash flows from operating activities:Net income (loss)$

2,653

$

(4,315

)

Adjustments to reconcile net income (loss) to net cash from operating activities:Depreciation of property and equipment11,198

5,062

Amortization of intangible assets104,437

54,553

Stock-based compensation expense28,054

16,456

Deferred income taxes(1,796

)

(28,933

)

Loss on debt extinguishment8,012

8,300

Other8,289

4,775

Changes in operating assets and liabilities:Accounts receivable(9,260

)

3,306

Unbilled contracts receivable5,978

12,645

Other assets(24,096

)

(9,675

)

Accounts payable1,307

3,334

Accrued and other liabilities(44,096

)

(5,199

)

Deferred revenue(7,701

)

6,933

Net cash from operating activities82,979

67,242

Cash flows from investing activities:Purchases of property and equipment(4,858

)

(1,892

)

Proceeds from sale of property and equipment19

19

Net cash received (paid) for mergers and acquisitions(17,400

)

117,424

Purchases of intangible assets(92

)

(519

)

Purchases of short-term investments(45,755

)

-

Proceeds from sales of investments44,321

7,189

Proceeds from maturities of investments17,550

13,502

Net cash from investing activities(6,215

)

135,723

Cash flows from financing activities:Dividend paid(10,514

)

(20,153

)

Repayment of debt(63,750

)

(344,000

)

Proceeds from debt, net of debt discount and issuance costs(6,843

)

1,011,343

Repayment of assumed debt from merger transaction-

(734,609

)

Proceeds from employee stock purchase program and exercise of stock options7,247

4,765

Repurchases of common stock(43,324

)

(20,943

)

Net cash from financing activities(117,184

)

(103,597

)

Effect of exchange rate changes on cash and cash equivalents(808

)

94

Net increase (decrease) in cash and cash equivalents(41,228

)

99,462

Cash and cash equivalents at beginning of period170,188

74,551

Cash and cash equivalents at end of period$

128,960

$

174,013

Supplemental disclosure of cash flow information:Interest paid$

17,677

$

5,807

Income taxes paid, net of refunds$

14,909

$

13,723

Stock issued in merger transaction$

-

$

828,334

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Six Months Ended June 30, June 30, 2020 2021Cash flows from operating activities:Net income (loss) $ 2,653 $ (4,315 )

Adjustments to reconcile net income (loss) to netcash from operating activities:Depreciation of property and equipment 11,198 5,062

Amortization of intangible assets 104,437 54,553

Stock-based compensation expense 28,054 16,456

Deferred income taxes (1,796 ) (28,933 )

Loss on debt extinguishment 8,012 8,300

Other 8,289 4,775

Changes in operating assets and liabilities:Accounts receivable (9,260 ) 3,306

Unbilled contracts receivable 5,978 12,645

Other assets (24,096 ) (9,675 )

Accounts payable 1,307 3,334

Accrued and other liabilities (44,096 ) (5,199 )

Deferred revenue (7,701 ) 6,933

Net cash from operating activities 82,979 67,242

Cash flows from investing activities:Purchases of property and equipment (4,858 ) (1,892 )

Proceeds from sale of property and equipment 19 19

Net cash received (paid) for mergers and (17,400 ) 117,424 acquisitionsPurchases of intangible assets (92 ) (519 )

Purchases of short-term investments (45,755 ) -

Proceeds from sales of investments 44,321 7,189

Proceeds from maturities of investments 17,550 13,502

Net cash from investing activities (6,215 ) 135,723

Cash flows from financing activities:Dividend paid (10,514 ) (20,153 )

Repayment of debt (63,750 ) (344,000 )

Proceeds from debt, net of debt discount and (6,843 ) 1,011,343 issuance costsRepayment of assumed debt from merger transaction - (734,609 )

Proceeds from employee stock purchase program and 7,247 4,765 exercise of stock optionsRepurchases of common stock (43,324 ) (20,943 )

Net cash from financing activities (117,184 ) (103,597 )

Effect of exchange rate changes on cash and cash (808 ) 94 equivalentsNet increase (decrease) in cash and cash (41,228 ) 99,462 equivalentsCash and cash equivalents at beginning of period 170,188 74,551

Cash and cash equivalents at end of period $ 128,960 $ 174,013

Supplemental disclosure of cash flow information:Interest paid $ 17,677 $ 5,807

Income taxes paid, net of refunds $ 14,909 $ 13,723

Stock issued in merger transaction $ - $ 828,334

XPERI HOLDING CORPORATIONGAAP TO NON-GAAP RECONCILIATIONS(in thousands, except per share amounts)(unaudited)Net income attributable to the Company:Three Months EndedJune 30, 2021GAAP net loss attributable to the Company$

(1,118

)

Adjustments to GAAP net loss attributable to the Company:Stock-based compensation expense:Cost of revenue529

Research, development and other4,809

Selling, general and administrative9,497

Amortization expense52,242

Merger and integration-related costs:Transaction and other related costs recorded in selling, general and administrative1,190

Severance and retention recorded in cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets131

Severance and retention recorded in research, development and other771

Severance and retention recorded in selling, general and administrative914

Separation costs recorded in selling, general and administrative1,900

Gain from lease restructuring recorded in selling, general and administrative(156

)

Loss on debt extinguishment8,012

Expensed debt refinancing costs2,590

Cash taxes paid in excess of tax benefit recorded(11,864

)

Non-GAAP net income attributable to the Company$

69,447

Diluted earnings per share attributable to the Company:Three Months EndedJune 30, 2021GAAP diluted loss per share attributable to the Company$

(0.01

)

Adjustments to GAAP diluted loss per share attributable to the Company:Stock-based compensation expense0.13

Amortization expense0.46

Merger and integration-related costs0.03

Separation costs0.02

Gain from lease restructuring(0.00

)

Loss on debt extinguishment0.07

Expensed debt refinancing costs0.02

Cash taxes paid in excess of tax benefit recorded(0.11

)

Non-GAAP diluted earnings per share attributable to the Company$

0.61

Weighted average number of shares used in per sharecalculations excluding the effects of stock-based compensation - diluted113,722

XPERI HOLDING CORPORATIONGAAP TO NON-GAAP RECONCILIATIONS(in thousands, except per share amounts)(unaudited) Net income attributable to the Company: Three Months Ended June 30, 2021 GAAP net loss attributable to the Company $ (1,118 )

Adjustments to GAAP net loss attributable to the Company:Stock-based compensation expense:Cost of revenue 529

Research, development and other 4,809

Selling, general and administrative 9,497

Amortization expense 52,242

Merger and integration-related costs:Transaction and other related costs recorded in selling, general 1,190 and administrativeSeverance and retention recorded in cost of licensing, services 131 and software revenue, excluding depreciation and amortization ofintangible assetsSeverance and retention recorded in research, development and 771 otherSeverance and retention recorded in selling, general and 914 administrativeSeparation costs recorded in selling, general and administrative 1,900

Gain from lease restructuring recorded in selling, general and (156 )administrativeLoss on debt extinguishment 8,012

Expensed debt refinancing costs 2,590

Cash taxes paid in excess of tax benefit recorded (11,864 )

Non-GAAP net income attributable to the Company $ 69,447

Diluted earnings per share attributable to the Company: Three Months Ended June 30, 2021 GAAP diluted loss per share attributable to the Company $ (0.01 )

Adjustments to GAAP diluted loss per share attributable to theCompany:Stock-based compensation expense 0.13

Amortization expense 0.46

Merger and integration-related costs 0.03

Separation costs 0.02

Gain from lease restructuring (0.00 )

Loss on debt extinguishment 0.07

Expensed debt refinancing costs 0.02

Cash taxes paid in excess of tax benefit recorded (0.11 )

Non-GAAP diluted earnings per share attributable to the Company $ 0.61

Weighted average number of shares used in per sharecalculations excluding the effects of stock-based compensation - 113,722 diluted XPERI HOLDING CORPORATIONRECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in thousands)(unaudited)Three Months EndedJune 30, 2021Cash flow from operations$

56,250

Adjustments to cash flow from operations:Purchases of property & equipment(3,086

)

Merger and integration costs1,190

Separation-related costs1,900

Severance costs486

Adjusted free cash flow$

56,740

XPERI HOLDING CORPORATIONRECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in thousands)(unaudited) Three Months Ended June 30, 2021 Cash flow from operations $ 56,250

Adjustments to cash flow from operations:Purchases of property & equipment (3,086 )

Merger and integration costs 1,190

Separation-related costs 1,900

Severance costs 486

Adjusted free cash flow $ 56,740

XPERI HOLDING CORPORATIONRECONCILIATION FOR GUIDANCE ONGAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS(in millions)(unaudited)Twelve Months EndedDecember 31, 2021LowHighGAAP operating expense excluding COGS$

760.0

$

790.0

Stock-based compensation -- R&D(21.0

)

(21.0

)

Stock-based compensation -- SG&A(33.0

)

(33.0

)

Merger, integration and separation-related expense -- R&D(4.0

)

(4.0

)

Merger, integration and separation-related expense -- SG&A(23.0

)

(23.0

)

Amortization expense(204.0

)

(204.0

)

Total of non-GAAP adjustments(285.0

)

(285.0

)

Non-GAAP operating expense excluding COGS$

475.0

$

505.0

XPERI HOLDING CORPORATIONRECONCILIATION FOR GUIDANCE ONGAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS(in millions)(unaudited) Twelve Months Ended December 31, 2021 Low High GAAP operating expense excluding COGS $ 760.0 $ 790.0

Stock-based compensation -- R&D (21.0 ) (21.0 )

Stock-based compensation -- SG&A (33.0 ) (33.0 )

Merger, integration and separation-related expense -- R (4.0 ) (4.0 )&DMerger, integration and separation-related expense -- (23.0 ) (23.0 )SG&AAmortization expense (204.0 ) (204.0 )

Total of non-GAAP adjustments (285.0 ) (285.0 )

Non-GAAP operating expense excluding COGS $ 475.0 $ 505.0

XPERI HOLDING CORPORATIONRECONCILIATION FOR GUIDANCE ONOPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in millions)(unaudited)Twelve Months EndedDecember 31, 2021LowHighCash flow from operations$

180.0

$

220.0

Adjustments to cash flow from operations:Purchases of property & equipment(25.0

)

(25.0

)

Merger, integration and separation costs (1)30.0

30.0

Adjusted free cash flow$

185.0

$

225.0

(1) Includes severance costs and retention payments. View source version on businesswire.com: https://www.businesswire.com/news/home/20210803006013/en/

CONTACT: Xperi Investor Contact: Geri Weinfeld, Vice President of Investor Relations +1 818-436-1231 geri.weinfeld@xperi.com

CONTACT: Xperi Media Contact: Vanessa Fiske +1 408-836-3539 vanessa.fiske@xperi.com