Business Wire | Nov 8, 2021 04:05PM EST

Xperi Holding Corporation Announces Third Quarter 2021 Results

Nov. 08, 2021

SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 08, 2021--Xperi Holding Corporation (Nasdaq: XPER) (the "Company", "Xperi" or "we") today announced financial results for the third quarter ended September 30, 2021.

"We finished the third quarter with better-than-expected revenue, cash flow, and earnings, and we remain on track to deliver strong financial results for the year, despite seeing an increased impact from general supply chain constraints," said Jon Kirchner, chief executive officer of Xperi. "Importantly, we've made significant progress driving growth in our IP business, as well as advancing DTS AutoStage and DTS AutoSense deployments, increasing IPTV adoption, and expanding the TiVo Stream platform."

Third Quarter 2021 Financial Highlights:

* Revenue of $219.4 million, up 8.2% year-over-year. * GAAP loss per share of $(0.43) and non-GAAP earnings per share of $0.53. * Cash Flow from Operations of $82.9 million. * Adjusted Free Cash Flow1 of $87.7 million. * Repurchased $24.8 million of common stock.

Third Quarter 2021 Business and Recent Operating Highlights:

IP Licensing Business (Revenue: $101.6 million)

* Continued to demonstrate the long-term stability and significant profitability of the media IP business. * Signed a license with Yangtze Memory Technologies Co., Ltd. (YMTC), the first company to ship commercial 3D NAND product that incorporates hybrid bonding.

Product Business (Revenue: $117.7 million)

Consumer Experience business highlights:

* Revenue of $46.1 million. * Announced that The Walt Disney Company, IMAX, and DTS will launch IMAX Enhanced on Disney+ on November 12, 2021, beginning with the Marvel Cinematic Universe. * Expanded ad-supported TiVo+ with new content partners including QVC, Hallmark Movies & More, Magnolia Pictures and Kevin Hart's Laugh Out Loud; expanded Pluto TV offering with 33 new channels; and added AcornTV to the TiVo Stream 4K. * Successfully launched new Connected TV advertising product with unique audience targeting based on TiVo's viewership data.

Pay-TV business highlights:

* Revenue of $54.2 million. * Saw accelerated IPTV deployments and supported Cable One, Service Electric Cablevision, Blue Ridge, and Armstrong in launching IPTV services.

Connected Car business highlights:

* Revenue of $17.4 million. * Delivered HD Radio on 24 new 2021 car models in the U.S. and Mexico. * Mercedes launched the Mercedes C-Class with DTS AutoStage in Europe, following the successful launch of the S-Class. * BMW launched BMW iX vehicles with DTS AutoSense in Europe.

Capital Allocation

During the quarter, the Company repurchased $24.8 million of common stock.

On September 14, 2021, the Company paid $5.2 million to stockholders of record on August 24, 2021, for a quarterly cash dividend of $0.05 per share of common stock.

On October 29, 2021, the Board of Directors declared a dividend of $0.05 per share, payable on December 20, 2021, to stockholders of record on November 29, 2021.

Full Year 2021 Business Outlook

The Company made adjustments to its full year outlook, narrowing the revenue range, lowering the expense range, and raising the operating cash flow range.

Category New GAAP Outlook Prior GAAP Outlook

Revenue $870M to $890M $860M to $900M

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

Operating Expense excluding COGS^* $735M to $745M $760M to $790M

Interest Expense ~ $39M ~ $39M

Other Income ~ $4M ~ $4M

Cash Tax (net of refunds) ~$36M $35M to $38M

Basic Shares Outstanding 105M 105M

Diluted Shares Outstanding 107M 107M

Operating Cash Flow $205M to $225M $180M to $220M

CategoryNew Non-GAAP Outlook

Prior Non-GAAP Outlook

Revenue

$870M to $890M

$860M to $900M

COGS

$115M to $125M

$115M to $125M

Operating Expense excluding COGS*

$455M to $465M

$475M to $505M

Interest Expense

~ $39M

~ $39M

Other Income

~ $4M

~ $4M

Cash Tax (net of refunds)

~$36M

$35M to $38M

Basic Shares Outstanding

105M

105M

Diluted Shares Outstanding

112M

112M

Operating Cash Flow

$205M to $225M

$180M to $220M

Adjusted Free Cash Flow1*

$210M to $230M

$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 third quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Monday, November 8, 2021. To access the call in the U.S., please dial 800-367-2403, and for international callers, dial +1 334-777-6978. The conference ID is 5799999. 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 Q3 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 growth drivers 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: 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; 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; 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 and related 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 CORPXPER-E

Category New Non-GAAP Outlook Prior Non-GAAP Outlook

Revenue $870M to $890M $860M to $900M

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

Operating Expense excluding COGS^* $455M to $465M $475M to $505M

Interest Expense ~ $39M ~ $39M

Other Income ~ $4M ~ $4M

Cash Tax (net of refunds) ~$36M $35M to $38M

Basic Shares Outstanding 105M 105M

Diluted Shares Outstanding 112M 112M

Operating Cash Flow $205M to $225M $180M to $220M

Adjusted Free Cash Flow^1* $210M to $230M $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 third quarter 2021 earnings conference call at 2:00 PM Pacific Time (5:00 PM Eastern Time) on Monday, November 8, 2021. To access the call in the U.S., please dial 800-367-2403, and for international callers, dial +1 334-777-6978. The conference ID is 5799999. 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 Q3 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 growth drivers 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: 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; 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; 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 and related 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 CORPXPER-E

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited) Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2021 2020 2021 2020Revenue:Licensing, services and $ 214,558 $ 195,319 $ 651,075 $ 448,802 softwareHardware 4,821 7,478 12,172 9,291

Total revenue 219,379 202,797 663,247 458,093

Operating expenses:Cost of licensing, servicesand software revenue, 26,043 21,854 69,875 31,646 excluding depreciation andamortization of intangibleassetsCost of hardware revenue,excluding depreciation and 6,506 12,216 17,689 13,688 amortization of intangibleassetsResearch, development and 58,766 57,731 168,369 124,565 other related costsSelling, general and 62,627 63,785 197,754 168,586 administrativeDepreciation expense 6,796 6,753 17,994 11,815

Amortization expense 52,388 50,894 156,825 105,447

Litigation expense 2,327 8,527 7,162 14,501

Total operating expenses 215,453 221,760 635,668 470,248

Operating income (loss) 3,926 (18,963 ) 27,579 (12,155 )

Interest expense (8,532 ) (13,393 ) (30,400 ) (24,602 )

Other income and expense, 927 2,305 2,916 3,448 netLoss on debt extinguishment - - (8,012 ) (8,300 )

Loss before taxes (3,679 ) (30,051 ) (7,917 ) (41,609 )

Provision for (benefit 42,698 482 35,807 (6,761 )from) income taxesNet loss $ (46,377 ) $ (30,533 ) $ (43,724 ) $ (34,848 )

Less: net loss attributable (1,310 ) (781 ) (2,826 ) (1,819 )to noncontrolling interestNet loss attributable to $ (45,067 ) $ (29,752 ) $ (40,898 ) $ (33,029 )the CompanyLoss per share attributableto the Company:Basic $ (0.43 ) $ (0.28 ) $ (0.39 ) $ (0.44 )

Diluted $ (0.43 ) $ (0.28 ) $ (0.39 ) $ (0.44 )

Weighted average number of 104,849 107,499 104,898 75,441 shares used in per sharecalculations-basicWeighted average number of 104,849 107,499 104,898 75,441 shares used in per sharecalculations-diluted XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited)September 30,

December 31,

2021

2020

ASSETSCurrent assets:Cash and cash equivalents$

165,438

$

170,188

Available-for-sale debt securities71,863

86,947

Accounts receivable, net130,291

115,975

Unbilled contracts receivable, net103,277

132,431

Other current assets47,838

40,763

Total current assets518,707

546,304

Long-term unbilled contracts receivable4,653

6,761

Property and equipment, net61,265

63,207

Operating lease right-of-use assets70,858

80,226

Intangible assets, net864,485

1,004,379

Goodwill851,088

847,029

Other long-term assets153,486

153,270

Total assets$

2,524,542

$

2,701,176

LIABILITIES AND EQUITYCurrent liabilities:Accounts payable$

16,081

$

13,045

Accrued legal fees3,582

5,783

Accrued liabilities108,934

129,035

Current portion of long-term debt, net36,037

43,689

Deferred revenue43,989

33,119

Total current liabilities208,623

224,671

Deferred revenue, less current portion28,601

39,775

Long-term deferred tax liabilities19,181

24,754

Long-term debt, net738,438

795,661

Noncurrent operating lease liabilities57,124

66,243

Other long-term liabilities101,421

98,953

Total liabilities1,153,388

1,250,057

Commitments and contingenciesCompany stockholders' equity:Preferred stock-

-

Common stock113

110

Additional paid-in capital1,324,763

1,268,471

Treasury stock at cost(152,453

)

(77,218

)

Accumulated other comprehensive income (loss)(297

)

1,264

Retained earnings207,600

264,250

Total Company stockholders' equity1,379,726

1,456,877

Noncontrolling interest(8,572

)

(5,758

)

Total equity1,371,154

1,451,119

Total liabilities and equity$

2,524,542

$

2,701,176

XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands)(unaudited) September 30, December 31,

2021 2020

ASSETSCurrent assets:Cash and cash equivalents $ 165,438 $ 170,188

Available-for-sale debt securities 71,863 86,947

Accounts receivable, net 130,291 115,975

Unbilled contracts receivable, net 103,277 132,431

Other current assets 47,838 40,763

Total current assets 518,707 546,304

Long-term unbilled contracts receivable 4,653 6,761

Property and equipment, net 61,265 63,207

Operating lease right-of-use assets 70,858 80,226

Intangible assets, net 864,485 1,004,379

Goodwill 851,088 847,029

Other long-term assets 153,486 153,270

Total assets $ 2,524,542 $ 2,701,176

LIABILITIES AND EQUITYCurrent liabilities:Accounts payable $ 16,081 $ 13,045

Accrued legal fees 3,582 5,783

Accrued liabilities 108,934 129,035

Current portion of long-term debt, net 36,037 43,689

Deferred revenue 43,989 33,119

Total current liabilities 208,623 224,671

Deferred revenue, less current portion 28,601 39,775

Long-term deferred tax liabilities 19,181 24,754

Long-term debt, net 738,438 795,661

Noncurrent operating lease liabilities 57,124 66,243

Other long-term liabilities 101,421 98,953

Total liabilities 1,153,388 1,250,057

Commitments and contingenciesCompany stockholders' equity:Preferred stock - -

Common stock 113 110

Additional paid-in capital 1,324,763 1,268,471

Treasury stock at cost (152,453 ) (77,218 )

Accumulated other comprehensive income (loss) (297 ) 1,264

Retained earnings 207,600 264,250

Total Company stockholders' equity 1,379,726 1,456,877

Noncontrolling interest (8,572 ) (5,758 )

Total equity 1,371,154 1,451,119

Total liabilities and equity $ 2,524,542 $ 2,701,176



XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)Nine Months EndedSeptember 30, 2021

September 30, 2020

Cash flows from operating activities:Net loss$

(43,724

)

$

(34,848

)

Adjustments to reconcile net loss to net cash from operating activities:Depreciation of property and equipment17,994

11,815

Amortization of intangible assets156,825

105,447

Stock-based compensation expense42,468

26,614

Deferred income taxes(7,092

)

(28,158

)

Loss on debt extinguishment8,012

8,300

Patent assets received in lieu of cash(8,787

)

-

Other8,474

8,635

Changes in operating assets and liabilities:Accounts receivable(14,327

)

14,982

Unbilled contracts receivable30,708

37,874

Other assets(3,956

)

(21,793

)

Accounts payable3,036

921

Accrued and other liabilities(23,414

)

(6,471

)

Deferred revenue(304

)

6,115

Net cash from operating activities165,913

129,433

Cash flows from investing activities:Purchases of property and equipment(8,298

)

(2,975

)

Proceeds from sale of property and equipment19

-

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

)

117,424

Purchases of intangible assets(119

)

(692

)

Purchases of short-term investments(65,446

)

(68,093

)

Proceeds from sales of investments46,248

7,189

Proceeds from maturities of investments33,436

19,683

Net cash from investing activities(11,560

)

72,536

Cash flows from financing activities:Dividends paid(15,752

)

(25,579

)

Repayment of debt(73,923

)

(357,125

)

Debt refinancing costs(6,843

)

-

Proceeds from debt, net of debt discount and issuance costs-

1,010,286

Repayment of assumed debt from merger transaction-

(734,609

)

Proceeds from employee stock purchase program and exercise of stock options13,839

4,765

Repurchases of common stock(75,235

)

(59,291

)

Net cash from financing activities(157,914

)

(161,553

)

Effect of exchange rate changes on cash and cash equivalents(1,189

)

758

Net increase (decrease) in cash and cash equivalents(4,750

)

41,174

Cash and cash equivalents at beginning of period170,188

74,551

Cash and cash equivalents at end of period$

165,438

$

115,725

Supplemental disclosure of cash flow information:Interest paid$

25,030

$

20,372

Income taxes paid, net of refunds$

22,151

$

30,647

Stock issued in merger transaction$

-

$

828,334

XPERI HOLDING CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) Nine Months Ended September September 30, 30, 2020 2021

Cash flows from operating activities:Net loss $ (43,724 ) $ (34,848 )

Adjustments to reconcile net loss to net cash fromoperating activities:Depreciation of property and equipment 17,994 11,815

Amortization of intangible assets 156,825 105,447

Stock-based compensation expense 42,468 26,614

Deferred income taxes (7,092 ) (28,158 )

Loss on debt extinguishment 8,012 8,300

Patent assets received in lieu of cash (8,787 ) -

Other 8,474 8,635

Changes in operating assets and liabilities:Accounts receivable (14,327 ) 14,982

Unbilled contracts receivable 30,708 37,874

Other assets (3,956 ) (21,793 )

Accounts payable 3,036 921

Accrued and other liabilities (23,414 ) (6,471 )

Deferred revenue (304 ) 6,115

Net cash from operating activities 165,913 129,433

Cash flows from investing activities:Purchases of property and equipment (8,298 ) (2,975 )

Proceeds from sale of property and equipment 19 -

Net cash received (paid) for mergers and (17,400 ) 117,424 acquisitionsPurchases of intangible assets (119 ) (692 )

Purchases of short-term investments (65,446 ) (68,093 )

Proceeds from sales of investments 46,248 7,189

Proceeds from maturities of investments 33,436 19,683

Net cash from investing activities (11,560 ) 72,536

Cash flows from financing activities:Dividends paid (15,752 ) (25,579 )

Repayment of debt (73,923 ) (357,125 )

Debt refinancing costs (6,843 ) -

Proceeds from debt, net of debt discount and - 1,010,286 issuance costsRepayment of assumed debt from merger transaction - (734,609 )

Proceeds from employee stock purchase program and 13,839 4,765 exercise of stock optionsRepurchases of common stock (75,235 ) (59,291 )

Net cash from financing activities (157,914 ) (161,553 )

Effect of exchange rate changes on cash and cash (1,189 ) 758 equivalentsNet increase (decrease) in cash and cash (4,750 ) 41,174 equivalentsCash and cash equivalents at beginning of period 170,188 74,551

Cash and cash equivalents at end of period $ 165,438 $ 115,725

Supplemental disclosure of cash flow information:Interest paid $ 25,030 $ 20,372

Income taxes paid, net of refunds $ 22,151 $ 30,647

Stock issued in merger transaction $ - $ 828,334



XPERI HOLDING CORPORATION

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

(45,067

)

Adjustments to GAAP net loss attributable to the Company:Stock-based compensation expense:Cost of revenue525

Research, development and other5,110

Selling, general and administrative8,779

Amortization expense52,388

Merger and integration-related costs:Transaction and other related costs recorded in selling, general and administrative130

Severance and retention recorded in cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets100

Severance and retention recorded in research, development and other129

Severance and retention recorded in selling, general and administrative115

Separation costs recorded in selling, general and administrative2,241

Tax provision recorded in excess of cash taxes paid35,456

Non-GAAP net income attributable to the Company$

59,906

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

(0.43

)

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

Amortization expense0.46

Merger and integration-related costs0.01

Separation costs0.02

Difference in shares used in the calculation0.03

Tax provision recorded in excess of cash taxes paid0.31

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

0.53

Weighted average number of shares used in per share calculations excluding the effects of stock-based compensation - diluted113,107

XPERI HOLDING CORPORATION

GAAP TO NON-GAAP RECONCILIATIONS(in thousands, except per share amounts)(unaudited) Net income attributable to the Company: Three Months Ended September 30, 2021 GAAP net loss attributable to the Company $ (45,067 )

Adjustments to GAAP net loss attributable to the Company:Stock-based compensation expense:Cost of revenue 525

Research, development and other 5,110

Selling, general and administrative 8,779

Amortization expense 52,388

Merger and integration-related costs:Transaction and other related costs recorded in selling, general 130 and administrativeSeverance and retention recorded in cost of licensing, services 100 and software revenue, excluding depreciation and amortization ofintangible assetsSeverance and retention recorded in research, development and 129 otherSeverance and retention recorded in selling, general and 115 administrativeSeparation costs recorded in selling, general and administrative 2,241

Tax provision recorded in excess of cash taxes paid 35,456

Non-GAAP net income attributable to the Company $ 59,906

Diluted earnings per share attributable to the Company: Three Months Ended September 30, 2021 GAAP diluted loss per share attributable to the Company $ (0.43 )

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

Amortization expense 0.46

Merger and integration-related costs 0.01

Separation costs 0.02

Difference in shares used in the calculation 0.03

Tax provision recorded in excess of cash taxes paid 0.31

Non-GAAP diluted earnings per share attributable to the Company $ 0.53

Weighted average number of shares used in per share calculations 113,107 excluding the effects of stock-based compensation - diluted XPERI HOLDING CORPORATIONRECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in thousands)(unaudited)Three Months EndedSeptember 30, 2021Cash flow from operations$

82,934

Adjustments to cash flow from operations:Purchases of property & equipment(3,440

)

Merger and integration costs130

Separation-related costs2,241

Severance costs55

Retention payments5,823

Adjusted free cash flow$

87,743

XPERI HOLDING CORPORATIONRECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in thousands)(unaudited) Three Months Ended September 30, 2021 Cash flow from operations $ 82,934

Adjustments to cash flow from operations:Purchases of property & equipment (3,440 )

Merger and integration costs 130

Separation-related costs 2,241

Severance costs 55

Retention payments 5,823

Adjusted free cash flow $ 87,743

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$

735.0

$

745.0

Stock-based compensation -- R&D(22.0

)

(22.0

)

Stock-based compensation -- SG&A(36.0

)

(36.0

)

Merger, integration and separation-related expense -- R&D(3.0

)

(3.0

)

Merger, integration and separation-related expense -- SG&A(14.0

)

(14.0

)

Amortization expense(205.0

)

(205.0

)

Total of non-GAAP adjustments(280.0

)

(280.0

)

Non-GAAP operating expense excluding COGS$

455.0

$

465.0

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 $ 735.0 $ 745.0

Stock-based compensation -- R&D (22.0 ) (22.0 )

Stock-based compensation -- SG&A (36.0 ) (36.0 )

Merger, integration and separation-related expense -- R (3.0 ) (3.0 )&DMerger, integration and separation-related expense -- (14.0 ) (14.0 )SG&AAmortization expense (205.0 ) (205.0 )

Total of non-GAAP adjustments (280.0 ) (280.0 )

Non-GAAP operating expense excluding COGS $ 455.0 $ 465.0

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

205.0

$

225.0

Adjustments to cash flow from operations:Purchases of property & equipment(15.0

)

(15.0

)

Merger, integration and separation costs (1)20.0

20.0

Adjusted free cash flow$

210.0

$

230.0

(1) Includes severance costs and retention payments. View source version on businesswire.com: https://www.businesswire.com/news/home/20211108006048/en/

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

CONTACT: Xperi Media Contact: Lauren Ward +1 310-227-9801 lauren.ward@xperi.com