10q10k10q10k.net

What changed in Xperi Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Xperi Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+517 added−424 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-06)

Top changes in Xperi Inc.'s 2023 10-K

517 paragraphs added · 424 removed · 301 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

92 edited+26 added−26 removed45 unchanged
Biggest changeIntellectual Property Portfolio We operate in an industry in which innovation, investment in new ideas and protection of our intellectual property rights are critical for success. We protect our innovations and inventions through a variety of means, including, but not limited to, applying for patent, copyright, and trademark protection domestically and internationally, and protecting our trade secrets.
Biggest changeWe protect our innovations and inventions through a variety of means, including, but not limited to, applying for patent, copyright, and trademark protection domestically and internationally, and protecting our trade secrets. As of December 31, 2023, we held approximately 749 United States issued patents and 156 patent applications, as well as approximately 1,024 foreign issued patents and 210 patent applications.
A McKinsey survey reported that 37% of consumers state they are eager to switch to cars with increased connectivity and nearly half of high-end auto consumers express an interest in exploring the digital capabilities of their new cars.
A McKinsey survey reported that 37% of consumers state they are eager to switch to cars with increased connectivity and nearly half of the high-end auto consumers express an interest in exploring the digital capabilities of their new cars.
Such laws and regulations could affect our ability to process personal data (in particular, our ability to use certain data or personal information for purposes such as monetization, risk or fraud avoidance, and targeted marketing or advertising, or otherwise to provide data about the end-users and/or customers and their behavior), our 18 ability to control our costs by using certain vendors or service providers, or our ability to offer certain services in certain jurisdictions, which in turn could negatively affect our financial condition and business operations, and subject us to fines, penalties, or other liability.
Such laws and regulations could affect our ability to process personal data (in particular, our ability to use certain data or personal information for purposes such as monetization, risk or fraud avoidance, and targeted marketing or advertising, or otherwise to provide data about the end-users and/or customers and their behavior), our ability to control our costs by using certain vendors or service providers, or our ability to offer certain services in certain jurisdictions, which in turn could negatively affect our financial condition and business operations, and subject us to fines, penalties, or other liability.
We provide products and services to entertainment media ecosystem partners such as motion picture studios, game developers and other content creators to facilitate the inclusion of compelling, realistic DTS-encoded audio within their content. The incorporation of our solutions into consumer end devices allows consumers to experience immersive and compelling audio wherever they choose to enjoy it.
We provide products and services to entertainment ecosystem partners such as motion picture studios, game developers and other content creators to facilitate the inclusion of compelling, realistic DTS-encoded audio within their content. The incorporation of our solutions into consumer end devices allows consumers to experience immersive and compelling audio wherever they choose to enjoy it.
Legacy TiVo DVR Subscriptions We offer a direct-to-consumer retail TiVo subscription in North America. The TiVo Service Platform includes a modular front-end that allows the basic platform to be used by hardware manufacturers to build set-top-boxes that support digital and analog broadcast, cable, internet TV, OTT and VOD services.
Legacy TiVo DVR Subscriptions We offer direct-to-consumer retail TiVo DVR subscriptions in North America. The TiVo Service Platform includes a modular front-end that allows the basic platform to be used by hardware manufacturers to build set-top-boxes that support digital and analog broadcast, cable, internet TV, OTT and VOD services.
Our incentives are based on merit and we have a strong pay-for-performance culture. We benchmark our total rewards annually to ensure our compensation and benefit programs remain competitive with industry peers. Our compensation framework for employees reflects a combination of fixed and variable pay including base salary, bonuses, performance awards, and stock-based compensation.
Our incentives are based on merit and we have a strong pay-for-performance culture. We benchmark our total rewards to ensure our compensation and benefit programs remain competitive with industry peers. Our compensation framework for employees reflects a combination of fixed and variable pay including base salary, bonuses, performance awards, and stock-based compensation.
While we do not believe that our competitors’ metadata sets offer the same comprehensive breadth of focus on media exploration, discovery, and management in as many regions of the world as we do, they present competition to our metadata business for each of their areas of focus.
While we do not believe our competitors’ metadata sets offer the same comprehensive breadth of focus on media exploration, discovery, and management in as many regions of the world as we do, we do believe they present competition to our metadata business for each of their areas of focus.
The Children's Online Privacy Protection Act restricts the ability of service providers to collect information from minors and the Protection of Children from Sexual Predators Act of 1998 requires service providers to report evidence of violations of federal child pornography laws under certain circumstances.
The Children’s Online Privacy Protection Act restricts the ability of service providers to collect information from minors and the Protection of Children from Sexual 12 Predators Act of 1998 requires service providers to report evidence of violations of federal child pornography laws under certain circumstances.
Our UX Solutions: • allow service providers to customize certain elements of the interactive program guide for their customers and to upgrade the programming features and services they offer; • provide content producers with a platform for monetizing their content; • allow viewers to build their own entertainment bundle to truly personalize their experience with current and future program information; and • are compatible with service providers’ linear, network DVR, Start-Over/Catch-Up subscription management, pay-per-view (PPV) and VOD services.
Our UX Solutions: • allow service providers to customize certain elements of the interactive program guide for their customers and to upgrade the programming features and services they offer; • provide content producers with a platform for monetizing their content; • allow viewers to build their own entertainment bundle to truly personalize their experience with current and future program information; and • are compatible with service providers’ linear, network DVR, Start-Over/Catch-Up subscription management, pay-per-view (“PPV”) and VOD services.
Omdia S.A. estimates revenues from the shipment of these platforms and devices in North America alone (including TVs, Smartphones, Tablets and PCs, Streaming Media Players, connected Blu-Rays players, and Video Game consoles) are expected to surpass $190 billion in 2023 and continue to grow by 3% year-over-year to 2025. • Growing Connectivity in Cars and the Future of Semi-Autonomous and Autonomous Vehicles : As the automobile dashboard interface becomes more integral to the in-car experience, purchasing a car for its infotainment capabilities starts to move up the list of purchase considerations for car buyers.
Omdia S.A. estimates revenues from the shipment of these platforms and devices in North America alone (including TVs, Smartphones, Tablets and PCs, Streaming Media Players, connected Blu-Rays players, and Video Game consoles) will surpass $190 billion in 2023 and continue to grow by 3% year-over-year to 2025. • Growing Connectivity in Cars and the Future of Semi-Autonomous and Autonomous Vehicles : As the automobile dashboard interface becomes more integral to the in-car experience, purchasing a car for its infotainment capabilities starts to move up the list of purchase considerations for car buyers.
In particular, we are competing for technical talent and we need to offer not only robust and attractive compensation packages but also provide broad opportunities for our employees to make an impact, grow, and develop. As of December 31, 2022, we had a global talent base consisting of approximately 2,100 full-time employees.
In particular, we are competing for technical talent and we need to offer not only robust and attractive compensation packages but also provide broad opportunities for our employees to make an impact, grow, and develop. As of December 31, 2023, we had a global talent base consisting of approximately 2,100 full-time employees.
Consumer Electronics Our audio licensing products face competition from other third-party providers of similar solutions as well as internal engineering and design groups among industry IC providers and consumer electronics manufacturers. 16 Our primary competitor is Dolby Laboratories, which develops and markets, among other things, high-definition audio products and services.
Consumer Electronics Our audio licensing products face competition from other third-party providers of similar solutions as well as internal engineering and design groups among industry IC providers and consumer electronics manufacturers. 10 Our primary competitor is Dolby Laboratories, which develops and markets, among other things, high-definition audio products and services.
We differentiate our products by continuing to integrate our broad portfolio of products into a suite of solutions and services for our customers. We believe our solutions speed our customers’ time to market, are superior to “do-it-yourself” products, and can be deployed at a lower cost than internally built products.
We differentiate our products by continuing to integrate our broad portfolio of products into a suite of solutions and services for our customers. We believe our solutions accelerate our customers’ time to market, are superior to “do-it-yourself” solutions, and can be deployed at a lower cost than internally built products.
Our SEC reports can be accessed through the investor relations section of our website. The information found on our website and in our ESG report is not incorporated into this or any other report we file with or furnish to the SEC. 20
Our SEC reports can be accessed through the investor relations section of our website. The information found on our website and in our ESG report is not incorporated into this or any other report we file with or furnish to the SEC. 14
Such companies may offer more economically attractive agreements to service providers and CE manufacturers by bundling multiple products together. We face competition for our Pay-TV product offerings from customers who choose to build their own interactive program guide and DVR solutions.
Such companies may offer more economically attractive agreements to service providers and consumer electronics manufacturers by bundling multiple products together. We face competition for our Pay-TV product offerings from customers who choose to build their own interactive program guide and DVR solutions.
As the platform scales, we expect to monetize through the following vehicles: • Ad Supported Content : The sale of ad inventory on services, including our own TiVo+ and certain third-party AVOD services. • SVOD and MVPD Services : Revenue shared by SVOD and virtual MVPD services on new user subscriptions activated or re-activated through our OS platform. • Home Screen Ad Placements : Ad placements on the TiVo OS platform’s home screen by streaming services, studios, and other consumer brands. • Data Licensing: Revenue from advertisers, advertising agencies, and networks to license data generated from TiVo platforms to inform their ad buying decisions. • Off-Platform Ads : Household identifications taken from the TiVo OS platform and used to target other media sources. 15 Monetization – TV Viewership Data We offer TV viewership data with program airing data for millions of households.
As the footprint of devices using TiVo OS grows, we expect to monetize the devices through the following vehicles: • Ad Supported Content : The sale of ad inventory on services, including our own TiVo+ and certain third-party AVOD services. • SVOD and MVPD Services : Revenue shared by SVOD and virtual MVPD services on new user subscriptions activated or re-activated through our OS platform. • Home Screen Ad Placements : Ad placements on the TiVo OS platform’s home screen by streaming services, studios, and other consumer brands. • Data Licensing: Revenue from advertisers, advertising agencies, and networks to license data generated from TiVo platforms to inform their ad buying decisions. • Off-Platform Ads : Household identifications taken from the TiVo OS platform and used to target other media sources. 9 Monetization – TV Viewership Data We offer TV viewership data with program airing data for millions of households.
We believe the overall OTT streaming market growth, our independent position, our differentiated end-user solution, and our more inclusive business model of sharing economics with Tier 2 and Tier 3 Smart TV OEMs represents an opportunity where we can establish a strong position.
We believe the overall OTT streaming market growth, our independent position, our differentiated end-user solution, and our more inclusive business model of sharing economics with Smart TV OEMs represents an opportunity where we can establish a strong position.
Our ongoing investment in R&D, supported by a strong industry network of partners, enables us to deliver differentiated, cost-effective solutions that enhance the end-user experience for an ever-larger universe of addressable markets.
Our ongoing investment in R&D, supported by a strong industry network of partners, enables us to deliver differentiated, cost-effective solutions that enhance the end-user experience for an increasing universe of addressable markets.
Xperi, the Xperi logo, TiVo, the TiVo logo, DTS, the DTS logo, Ergo, FotoNation, DTS HD, DTS Audio Processing, DTS:X Ultra, DTS Virtual:X, DTS Headphone:X, DTS Play Fi, DTS:X, DTS AutoSense, DTS AutoStage, and HD Radio are trademarks or registered trademarks of Xperi Inc. or its affiliated companies in the United States and other countries.
Xperi, the Xperi logo, TiVo, the TiVo logo, DTS, the DTS logo, Ergo, DTS HD, DTS Audio Processing, DTS:X Ultra, DTS Virtual:X, DTS Headphone:X, DTS Play-Fi, DTS:X, DTS AutoStage, and HD Radio are trademarks or registered trademarks of Xperi or its affiliated companies in the United States and other countries.
General Government Regulation We are subject to a number of foreign and domestic laws and regulations that affect companies that import or export software and technology, such as the U.S. export control regulations as administered by the U.S. Department of Commerce.
We are subject to a number of foreign and domestic laws and regulations that affect companies that import or export software and technology, such as the U.S. export control regulations as administered by the U.S. Department of Commerce.
Our Managed IPTV Service enables broadband operators, 5G network providers and cable operators to offer TV-as-a-service without having to invest in video head-end infrastructure or end-user set-top-boxes.
Our Managed IPTV Service enables broadband service providers, wireless network providers and cable operators to offer TV-as-a-service without having to invest extensively in video head-end infrastructure or end-user set-top-boxes.
In addition, several other federal laws could have an impact on our business. For example, the DMCA has provisions that limit, but do not eliminate, our liability for hosting or linking to third-party websites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act.
In addition, several other federal laws could have an impact on our business. For example, the Digital Millennium Copyright Act of 1998 has provisions that limit, but do not eliminate, our liability for hosting or linking to third-party websites that include materials that infringe copyrights or other rights, so long as we comply with the statutory requirements of this act.
We believe that we provide a strong alternative to “do-it-yourself,” as we have innovative, high-quality products ready to be implemented, with local and network DVR, integrated data distribution infrastructure and content, as well as third-party services (such as VOD services).
We believe that we provide a strong alternative to “do-it-yourself” solutions, as we have innovative, high-quality products ready to be implemented, with local and network DVR, integrated data distribution infrastructure and content, as well as third-party services (such as VOD services).
As the TiVo OS footprint increases, the inventory of FAST and AVOD services such as our own TiVo+ network increases and provides a robust opportunity to monetize this unique, connected TV advertisement inventory.
As the TiVo OS footprint increases, the inventory of FAST and AVOD services, such as our own TiVo+ network, also increases to provide a robust opportunity to monetize this unique, connected TV advertisement inventory.
We operate in one reportable business segment and currently group our business into four categories based on the markets served: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 2,100 employees and more than 35 years of operating experience.
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 2,100 employees and more than 35 years of operating experience.
Over time, we believe consumers will place significant importance on the quality of media delivery and will expect the quality of delivery in the car to be comparable to that of their living room. • Increasing Use of “Smart” Devices : Consumers have long relied on smartphones enabled with virtual assistants, talk-to-text, and other intelligent features, and increasingly want other home devices (as well as their automobiles) to be enabled with similar smart capabilities.
Over time, we believe consumers will place significant importance on the quality of media delivery and will expect the quality of delivery in the car to be comparable to that of their living room including access to OTT video and interactive gaming solutions. • Increasing Use of “Smart” Devices : Consumers have long relied on smartphones enabled with virtual assistants, talk-to-text, and other intelligent features, and increasingly want other home devices (as well as their automobiles) to be enabled with similar smart capabilities.
We are also subject to international laws (including but not limited to the European Union’s General Data Protection Regulation) associated with data protection, privacy, and other aspects of our business in Europe, Asia, and elsewhere in the world, and the interpretation and application of data protection laws remains uncertain.
We are also subject to international laws (including but not limited to the European Union’s General Data Protection Regulation) associated with data protection, privacy, and other aspects of our business in Europe, Asia, and elsewhere in the world, and the interpretation and application of data protection laws remains uncertain. Our operations in China may also be subject to privacy regulations.
Our natural language voice solution, when combined with our advanced search and recommendations technology, enables a conversational 8 interaction between a viewer and their content experience. Engagement behaviors are then analyzed and optimized, thereby providing our customers with the ability to continuously engage and improve the consumer experience, with the ultimate goal of reducing churn.
Our natural language voice solution, when combined with our advanced search and recommendations technology, enables a conversational interaction between a viewer and their content experience. Engagement behaviors are then analyzed and optimized, thereby providing our customers with the insight required to continuously engage and improve the consumer experience, with the ultimate goal of increasing viewership and reducing churn.
We have licensed our audio technologies and related trademarks to substantially all the major consumer electronics product manufacturers worldwide. These customers include Denso, Harman, Hisense, LG, Microsoft, Panasonic, Samsung, Sony, and others. Typically, our audio technologies are delivered as software code on integrated circuit (IC) chips.
We have licensed our audio technologies and related trademarks to 7 substantially all the major consumer electronics product manufacturers worldwide. These customers include Denso, Harman, Hisense, HP, LG, Logitech, Microsoft, Panasonic, Samsung, Sony, TCL and others. Typically, our audio technologies are delivered as software code on integrated circuit (“IC”) chips.
While delivering ad-based programming to OTT audiences has presented new challenges, it has also created opportunities for advertisers to deliver customized, highly relevant, and targeted ad content to a critical and growing demographic.
While delivering ad-based programming to OTT audiences has presented new challenges, it has also created opportunities for advertisers to deliver customized, highly relevant, and targeted ad content to a rapidly growing audience.
For Tier 2 and Tier 3 Smart TV OEMs, TiVo OS will provide a platform to participate in the fast-growing connected TV monetization value chain with scale and cross-platform end-user insight not available to OEMs on a standalone basis.
For Tier 2 and Tier 3 Smart TV OEMs, TiVo OS provides an opportunity to participate in the fast-growing connected TV monetization value chain with scale and cross-platform end-user insight not available to OEMs on a standalone basis.
Electronic Program Guides Electronic Program Guides is our interactive program guide offering that includes intuitive, easy-to-use TV listings navigation plus integrated video-on-demand (VOD) and digital video recorder (DVR) capabilities.
Electronic Program Guides Electronic Program Guides is our interactive program guide offering that includes intuitive, easy-to-use TV listings navigation plus integrated video-on-demand (“VOD”) and digital video recorder (“DVR”) capabilities.
Annual assessments are performed to identify talent needs based on department goals and to evaluate how each function is positioned from a talent perspective. We believe in the principles of a learning organization and strive to provide continuous educational opportunities 19 for our employees. In 2020, we invested in a global online learning platform.
Annual assessments are performed to identify talent needs based on department goals and to evaluate how each function is positioned from a talent perspective. We believe in the principles of a learning organization and strive to provide continuous educational opportunities for our employees.
TiVo OS uniquely brings services from long-time partners such as Disney, Sling, and YouTube TV, among others, and seamlessly integrates local TV, free ad-supported TV ("FAST") and the most popular Ad-supported Video on Demand (“AVOD”), Subscription Video on Demand (“SVOD”), and virtual Multichannel Video Programming Distributor (“vMVPD”) services.
TiVo OS brings services from long-time partners such as Disney, Hulu, and YouTube TV, among others, and seamlessly integrates local TV, free ad-supported TV (“FAST”), and the most popular services for Ad-supported Video on Demand (“AVOD”), Subscription Video on Demand (“SVOD”), and virtual Multichannel Video Programming Distributor (“vMVPD”) services.
Our report will be available on the Xperi website. Using insights from the development of our inaugural materiality assessment, we created our ESG program around three key focus areas: Culture and Belonging, Resilience, and Community Impact. As part of our Resilience pillar, we aim to be positive stewards of the environment.
Using insights from the development of our inaugural materiality assessment, we created our ESG program around three key focus areas: Culture and Belonging, Resilience, and Community Impact. As part of our Resilience pillar, we aim to be positive stewards of the environment.
UX Business Operations and Technical Support Our UX Business has technical support and certification operations to support our products: • we provide training, technical support and integration services to Pay-TV service providers who license our products; • we operate the internet-based services required for our service offerings including data delivery, search, recommendation, advertising, device management and media recognition; • we provide broadcast delivery of television programming data and advertising to UXs on TVs and set-top-boxes in major European markets and in Japan, and in North America, we deliver similar programming and advertising data via the internet; • we support our customers with porting and engineering services to ensure our interactive program guides and DVRs operate properly; and • we provide customer care for UX and DVR customers to resolve data, advertising, and consumer functional issues. 9 Consumer Electronics 10 Our Consumer Electronics business provides technology solutions delivered to our customers to enhance their entertainment experience in the home and on-the-go.
UX Business Operations and Technical Support Our UX Business has technical support and certification operations to support our products: • we provide training, technical support and integration services to Pay-TV service providers who license our products; • we operate the internet-based services required for our service offerings including data delivery, search, recommendation, advertising, device management and media recognition; • we provide broadcast delivery of television programming data and advertising to UXs on TVs and set-top-boxes in major European markets, in Japan, and in North America; we also deliver similar programming and advertising data via the internet; • we support our customers with porting and engineering services to ensure our interactive program guides and DVRs operate properly; and • we provide customer care for UX and DVR customers to resolve data, advertising, and consumer functional issues.
Climate change is one of the defining challenges facing our society today, and we are committed to doing our part to address this challenge head on. In 2022, we conducted our first greenhouse gas (GHG) inventory of our Scope 1, 2, and 3 emissions, establishing a baseline to understand our environmental impact.
Climate change is one of the defining challenges facing our society today, and we are committed to doing our part to address this challenge head on. In 2023, we conducted our second greenhouse gas (GHG) inventory of our Scope 1, 2, and 3 emissions to understand our environmental impact.
Our platform faces competition from companies such as Synamedia, MediaKind, Kudelski, Enghouse Systems Limited, and from solutions developed by multiple system operators such as Comcast X1 and Liberty Global plc’s Horizon Media, which have created competing products that provide user interface software for use on set-top-boxes and CE and mobile devices.
Our platform faces competition from companies such as Synamedia, MediaKind, Kudelski, Enghouse Systems Limited, and from solutions developed by multiple system operators such as Comcast and Liberty Global plc, which have created competing products that provide user interface software for use on set-top-boxes, consumer electronics, and mobile devices.
Home and mobile devices that incorporate DTS audio codec technology include TVs, PCs, smartphones, tablets, set top boxes, video game consoles, Blu-ray Disc players, audio/video receivers, soundbars, wireless speakers and home theater systems.
Home and mobile devices that incorporate DTS audio codec technology include TVs, PCs, smartphones, tablets, set top boxes, video game consoles, Blu-ray Disc players, audio/video receivers, soundbars, wireless speakers, home theater systems, and USB microphones and headphones (gaming and non-gaming varieties).
Thus, we believe there is a significant market opportunity for tools that enable OEMs to monetize their products through recurring revenue streams across the lifecycle of the device rather than just a one-time monetization opportunity at the point-of-sale. • Marked Need for An Independent Media Platform : Close to half of Smart TVs each year are shipped into Western Europe and North America by leading electronics manufacturers who lack the scale required to support the technology, content, and monetization requirements of a streaming media platform.
Thus, we believe there is a significant market opportunity for an independent media platform that enables participants to monetize their products through recurring revenue streams across the lifecycle of the device rather than just a one-time monetization opportunity at the point-of-sale. 4 • Marked Need for An Independent Media Platform : Nearly half of all Smart TVs each year are shipped into Western Europe and North America by leading electronics manufacturers who lack the scale required to support the technology, content, and monetization capabilities of a Smart TV OS and streaming media platform.
We have historically competed effectively against these companies due in part to our brand being a premium offering that contains superior proprietary technology, the quality of our customer service, our inclusion in industry standards and our industry relationships.
We have historically competed effectively against these companies due in part to our brand, complemented by marketing efforts, being perceived as a premium offering that contains superior proprietary technology, as well as the quality of our customer service and our inclusion in industry standards and our industry relationships.
OTT media now accounts for 38% of weekly video viewing for adults ages 18 and older. Proliferation of OTT has created demand for a new generation of entertainment products that are centered on the OTT viewing experience.
OTT media now accounts for more than 50% of US weekly video viewing for adults ages 18 and older. The proliferation of OTT has created the need for a new generation of entertainment products that are centered on the OTT viewing experience.
Our platform creates high viewer engagement with an unbiased, content-first user experience where Hybrid TV and streaming services integrate in a personalized way that makes it easy to find, watch and enjoy content across siloed ecosystems. We endeavor to connect advertisers and entertainment producers to audiences they cannot as easily reach on other platforms.
Our platform creates high viewer engagement with an unbiased, content-first user experience where traditional linear TV and streaming services integrate into a personalized experience that makes it easy to find, watch and enjoy content 5 across fragmented ecosystems. Our solutions allow advertisers and entertainment producers to connect with audiences they cannot as easily reach on other platforms.
In addition to the Separation and Distribution Agreement, the other principal agreements entered into with our Former Parent include a Tax Matters Agreement, a Transition Services Agreement, an Employee Matters Agreement, a Cross Business License Agreement, and a Data Sharing Agreement. For additional information, see Note - 1 to our consolidated financial statements.
In addition to the Separation and Distribution Agreement, the other principal agreements entered into with our Former Parent include a Tax Matters Agreement, a Transition Services Agreement, an Employee Matters Agreement, a Cross Business License Agreement, and a Data Sharing Agreement.
IPTV Solutions The TiVo internet protocol television (IPTV) Service is our most advanced platform, offering a fully integrated, cloud-based solution that powers the TiVo client software which operates on set-top-boxes in consumer homes, as well as applications that operate on third-party software platforms such as iOS and Android that power tablets, smartphones, and bring-your-own-device (BYOD) streaming devices.
TiVo IPTV The TiVo IPTV Service is our most advanced platform, offering a fully integrated, cloud-based solution that powers the TiVo client software which operates on set-top-boxes in consumer homes, as well as applications that operate on third-party software platforms such as iOS and Android that power tablets, smartphones, Smart TVs, streaming devices such as Apple TV and Android TV, and traditional IPTV set-top boxes.
TV as a Service IPTV Program We offer a Managed IPTV Service that is a customizable, cloud-enabled, end-to-end streaming video solution that enables operators to quickly launch a branded, fully compliant, full-featured Pay-TV service that leverages devices such as Apple TV, Android TV, and Amazon Fire TV.
TV as a Service IPTV We offer a Managed IPTV Service that is a customizable, cloud-enabled, end-to-end streaming video solution that enables operators to quickly launch a branded, fully compliant, full-featured Pay-TV service that leverages tablets, smartphones, Smart TVs, streaming devices such as Apple TV and Android TV, and traditional IPTV set-top-boxes.
Perceive’s Ergo family of chips and associated software deliver breakthrough innovation – the ability to run datacenter-class AI models at the edge, delivering accuracy and high performance at ultra-low power, performing a wide range of tasks such as object detection, face recognition and audio/video event detection.
Perceive’s Ergo family of chips, IP and associated software deliver breakthrough innovation – the ability to run advanced AI models at the edge, delivering accuracy and high performance at ultra-low power, enabling a wide range of applications such as object detection, audio/video event detection and media processing.
This creates a unique opportunity for an independent media platform that allows Smart TV OEMs to brand the experience, retain customer ownership, and participate in the long-term monetization throughout the typical 5-year lifecycle of TV ownership. • Increasing Consumption of Video Content : Average weekly video viewing has increased 10%, from 40 hours per week in 2015 to 44 hours per week in 2020, driven by a number of factors, including increased availability of content catering to various consumer tastes and preferences, new platforms for consumption such as personal devices (e.g., mobiles and tablets), and disruption from the COVID-19 pandemic.
This creates a unique opportunity for an independent media platform that allows Smart TV OEMs to brand the experience to maintain the customer relationship, provide the necessary scale to secure top content streaming providers, and participate in the long-term monetization throughout the typical 5-year lifecycle of TV ownership. • Increasing Consumption of Video Content : Average U.S. weekly video viewing of 42 hours remains relatively consistent from COVID-era highs, up from an average of 38 hours per week in 2015, driven by a number of factors, including increased availability of content catering to various consumer tastes and preferences, new platforms for consumption such as personal devices (e.g., mobiles and tablets), and disruption from the COVID-19 pandemic.
There is a new set of industry participants that are looking for ways to monetize the ad-based ecosystem, including consumer electronics manufacturers, OEMs, and others that have historically not participated in the OTT value chain.
At the same time, there is a new set of industry participants that are looking for ways to monetize the ad-based ecosystem, including consumer electronics manufacturers, Smart TV OEMs, automotive manufacturers, and video-over-broadband (“IPTV”) operators that have historically not participated in the OTT value chain.
(“we”, “our”, the “Company” or “Xperi”), a wholly owned subsidiary of Adeia, was completed. The Spin-Off was achieved through our Former Parent's distribution (the “Distribution”) of 100% of the shares of Xperi’s common stock to holders of our Former Parent’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”).
The Spin-Off was achieved through our Former Parent's distribution (the “Distribution”) of 100% of the shares of Xperi’s common stock to holders of our Former Parent’s common stock as of the close of business on the record date of September 21, 2022 (the “Record Date”).
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, elevating content and how audiences connect with it in a way that is more intelligent, immersive and personal.
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.
We license a defined and limited set of rights to incorporate our technology onto IC chips, and the IC manufacturers deliver these chips to our customers, the consumer electronics product manufacturers.
We license a defined and limited set of rights to incorporate our technology onto IC chips, and the IC manufacturers deliver these chips to our customers, the consumer electronics product manufacturers. We also license our decoder and post processing as a Software Development Kit (“SDK”).
These growth drivers include: the delivery and monetization of the TiVo OS into Smart TVs, proliferation of in-cabin monitoring (AutoSense) and infotainment (AutoStage) solutions into the connected car market, increased adoption of our IPTV solutions in the Pay-TV market, and unit growth in consumer electronics from in-home Wi-Fi solutions (Play-Fi) and IMAX Enhanced.
These growth drivers include: the delivery and monetization of the TiVo OS into Smart TVs, infotainment (AutoStage) solutions into the connected car market, increased adoption of our IPTV solutions in the Pay-TV market, and unit growth in consumer electronics from DTS audio solutions.
The CCPA requires covered businesses to provide new disclosures to California consumers, and allows for a new cause of action for data breaches.
For example, the California Consumer Privacy Act (“CCPA”) requires covered businesses to provide disclosures to California consumers and allows for a cause of action for data breaches.
The shift toward edge-based device capabilities is creating a potential opportunity for semiconductor components that are AI/ML capable, have low power requirements, and can be produced at reasonable cost. 5 Strategy Our business focuses on creating extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it, in a way that is more intelligent, immersive, and personal: • Pay-TV : We transform the traditional television user experience from linear multichannel video programming distributors (“MVPD”) with cloud-based DVRs into an immersive, intuitive, and hyper-personalized experience.
Strategy Our business focuses on creating extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it, in a way that is more intelligent, immersive, and personal: • Pay-TV : We transform the traditional television user experience from linear multichannel video programming distributors (“MVPD”) with cloud-based DVRs into an immersive, intuitive, and hyper-personalized experience.
Powering smart devices, connected cars, entertainment experiences and more, we have created a unified ecosystem that reaches highly engaged consumers, uncovering significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and media platforms worldwide, driving increased value for partners, customers and consumers.
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 expect the TiVo OS platform for Smart TVs to launch in 2023. TiVo OS for TVs will be licensed as a software-as-a-service to consumer electronic OEMs and will include the right to monetize all or part of the end-user content engagement over the life of the product.
TiVo OS for TVs is licensed as a software-as-a-service to Smart TV OEMs and will include the right to monetize all or part of the end-user content engagement over the life of the device.
We also offer DTS post-processing audio solutions designed to enhance the entertainment experience for users of consumer electronics devices, particularly those subject to the physical limitations of smaller speakers, such as TVs, PCs and mobile devices. DTS has been an exclusive licensing partner of IMAX Corporation for IMAX Enhanced since 2017.
We also offer DTS post-processing audio solutions designed to enhance the entertainment experience for users of consumer electronics devices, particularly those subject to the physical limitations of smaller speakers, such as TVs, laptop computers, soundbars and mobile devices.
Item 1. B usiness Corporate Information Our principal executive offices are located at 2190 Gold Street, San Jose, California 95002 USA. Our telephone number is +1 (408) 519-9100. We maintain a corporate website at xperi.com. The reference to our website address does not constitute incorporation by reference of the information contained on this website.
Item 1. B usiness Corporate Information The principal executive offices of Xperi Inc. (“we”, “our”, the “Company” or “Xperi”) are located at 2190 Gold Street, San Jose, California 95002 USA. Our telephone number is +1 (408) 519-9100. We maintain a corporate website at xperi.com.
HD Radio is supported by more than 2,400 radio stations, including 98 of the top 100 most listened-to stations in the United States, and is incorporated into vehicles from Acura, Audi, BMW, Ford, Honda, Hyundai, Tesla, and Toyota, among many others.
HD Radio is supported by more than 2,700 radio stations offering over 4,600 digital audio broadcasts, including 97 of the 100 largest stations in the United States, and is incorporated into vehicles from Acura, Audi, BMW, Ford, Honda, Hyundai, Tesla, and Toyota, among many others.
The last of the issued patents to expire is in 2041. 17 Research & Development As demonstrated by our portfolio of industry-recognized, widely-deployed advanced technologies, we have a long track record of innovating in the fields of audio, imaging, and video discovery.
The last of the issued patents to expire is in 2042. Research & Development As demonstrated by our portfolio of industry-recognized, widely-deployed advanced technologies, we have a long track record of innovating in the fields of audio, and video discovery. We believe that ongoing investment in R&D is required for us to remain competitive in the markets we serve.
Our technologies sit on the forefront of this transformation, enhancing consumer experiences where consumers spend their time the most – in their homes and in their cars. 4 Our technologies not only enhance user experiences, but also enable partners across the entire ecosystem to participate in the evolving content delivery value chain. • Shift to OTT and Streaming : OTT has rapidly become a mainstream content delivery mechanism through a wide variety of providers such as Netflix, Disney+ and YouTube.
Our solutions not only enhance the user experience, but also enable partners across the entire ecosystem to participate in the continuously evolving content delivery value chain. • Shift to OTT and Streaming : OTT has rapidly become a mainstream content delivery mechanism through a wide variety of providers such as Netflix, Disney+ and YouTube.
Each Adeia stockholder of record received four shares of Xperi common stock for every ten shares of Adeia common stock held on the Record Date. Following the Distribution, we became an independent, publicly-traded company with our common stock listed under the symbol “XPER” on the New York Stock Exchange (“NYSE”), and our Former Parent retains no ownership interest in Xperi.
Following the Spin-Off, we became an independent, publicly traded company with our common stock listed under the symbol “XPER” on the New York Stock Exchange (“NYSE”), and our Former Parent retains no ownership interest in Xperi.
Below are some of the key solutions we license: Home and Mobile Audio Solutions Our solutions consist of premier audio technology for high-definition entertainment experiences. Our DTS codec is designed to enable recording, delivery and playback of immersive high-definition audio and is incorporated by customers around the world into an array of consumer electronics devices.
Our DTS codec is designed to enable recording, delivery and playback of immersive high-definition audio and is incorporated by customers around the world into an array of consumer electronics devices.
We have devoted significant time and resources to develop a broad range of solutions with key partners including Amlogic, Analog Devices, Cadence, Cirrus Logic, Mediatek, NXP, Qualcomm, Realtek, Synaptics, Texas Instruments, and others. Perceive In the machine learning area, our Perceive subsidiary delivers silicon and software solutions for edge inference.
Our decoder software is integrated in mobile and tablet applications to support entertainment enjoyment on the go. We have devoted significant time and resources to develop a broad range of solutions with key partners including Amlogic, Analog Devices, Cadence, Cirrus Logic, MediaTek, NXP, Qualcomm, Realtek, Synaptics, Texas Instruments, and others.
Chinese data protection laws are still evolving and may impose additional restrictions on companies doing business in China. Our efforts to comply with these laws and regulations may result in increased costs of doing business.
The law imposes significant fines of up to RMB 50 million (approx. $7.7 million) or 5% of annual revenue for violations of the law. Chinese data protection laws are still evolving and may impose additional restrictions on companies doing business in China. Our efforts to comply with these laws and regulations may result in increased costs of doing business.
Employees are encouraged to create and align individual, functional and team-based goals, track performance against goals, write self-evaluations, and solicit feedback. We have demonstrated support and commitment to developing a culture of non-discrimination and embracing diversity, equity, and inclusion throughout our workforce. We have numerous employee resource groups (ERGs), employee-led, voluntary communities for groups that share similar backgrounds or identities.
We have demonstrated support and commitment to developing a culture of non-discrimination and embracing diversity, equity, and inclusion throughout our workforce. We have numerous employee resource groups (“ERGs”), employee-led, voluntary communities for groups that share similar backgrounds or identities.
Market Opportunity Consumer preferences and behavior around media consumption are undergoing a significant transformation, driven by new platforms for content delivery, greater availability of diverse content, and an increase in time spent consuming video content.
The Divestiture, which was completed in January 2024, is expected to further streamline our business and focus our investments on entertainment markets. Market Opportunity Consumer preferences and behavior around media consumption are undergoing a significant transformation, driven by new platforms for content delivery, greater availability of diverse content, and an increase in time spent consuming video content.
We believe that ongoing investment in R&D is required for us to remain competitive in the markets we serve. Today, we have a collection of world-class talent and strong research and development capabilities in various locations throughout the world. Starting with core research, machine learning and advanced algorithm development, we continue to focus on next generation technology solutions.
We have world-class talent and strong research and development capabilities in various locations throughout the world. Starting with core research, machine learning and advanced algorithm development, we continue to focus on next generation technology 11 solutions.
Personalized Content Discovery, Natural Language Voice and Insights Personalized Content Discovery with conversation services provides our customers with a way to enable their customers (the device user) to quickly find, discover and access content across linear broadcast television, VOD, DVR, and OTT sources.
Customers typically pay us a monthly or quarterly licensing fee for the rights to use our metadata, receive regular updates, and integrate metadata into their own service. 6 Personalized Content Discovery, Natural Language Voice and Insights Personalized Content Discovery with conversation services provides our customers with a way to enable their customers (the device user) to quickly find, discover and access content across linear television, VOD, DVR, and OTT sources.
In approaching content owners, advertisers and ad agencies to participate in the TiVo OS platform, we are competing with the same platforms and TV OEMs operating their own TV operating systems such as Samsung, Vizio and LG.
We work closely with content owners, advertisers, and ad agencies, where we monetize the viewing of ad-supported content across our TiVo OS platform. In doing so, we are competing with the same platforms and TV OEMs that operate their own TV operating systems such as Samsung, Vizio and LG. TiVo Stream 4K.
Consumers purchase TiVo DVRs and companion TiVo Mini whole-home devices for a user experience upgrade to the set-top-box experience provided by a standard cable service. Customers typically pay us a per-subscriber or per-device fee. Our search and recommendation solutions are widely deployed with many leading Pay-TV service providers including Charter Communications Inc. and Vodafone Group plc.
Consumers purchase TiVo DVRs and companion TiVo Mini whole-home devices for a user experience upgrade to the set-top-box experience provided by a standard cable service, and typically pay us a per-subscriber or per-device fee for TiVo DVR subscriptions.
All other company, brand and product names may be trademarks or registered trademarks of their respective companies. Overview On October 1, 2022 (the “Distribution Date”), the spin-off (the “Spin-Off” or the “Separation”) of the product business of Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia” or the “Former Parent”) into Xperi Inc.
Spin-Off Transaction On October 1, 2022 (the “Distribution Date” or the “Separation Date”), the spin-off (the “Spin-Off” or the “Separation”) of the product business of Adeia Inc. (formerly known as Xperi Holding Corporation) (“Adeia” or the “Former Parent”) into Xperi Inc. (“Xperi”), was completed.
TVs with integrated streaming capabilities from manufacturers such as Samsung, Vizio and LG also represent competition to the TiVo Stream 4K. TiVo OS . We compete for Smart TV platform support with companies such as Roku, Alphabet, Inc’s Google TV and Amazon’s FireTV.
TVs with integrated streaming capabilities from manufacturers such as Samsung, Vizio and LG also represent competition to the TiVo Stream 4K. TV Audience Data.
With autonomous vehicles pushing consumer expectations higher, we are innovating to create the dashboard of the future, accommodating more types of entertainment, from video to gaming and more. • Media Platform : We are uniquely positioned as an independent media platform that allows Smart TV OEMs to brand the experience, retain customer ownership and generate recurring revenues by participating in monetization throughout the approximate 5 year lifecycle of TV ownership.
We are innovating to create the dashboard of the future, striving to accommodate more types of entertainment, from audio, video, gaming and more to create a compelling entertainment experience in the car. • Media Platform : We are strongly positioned as an independent media platform that allows Smart TV OEMs to brand the experience to maintain the customer relationship, provide the necessary scale to secure top content streaming providers, and generate recurring revenues by participating in monetization throughout the lifecycle of TV ownership.
In this fast-expanding connected TV advertising market, we believe our cross-platform data insight from Pay-TV and TiVo OS households will allow us to create and promote a unique and compelling offering for advertisers. Over time, we expect to see new competitors and other competing technologies emerge.
Many of our existing customers are investing in platforms to enable their businesses with these capabilities. In this fast-expanding connected TV advertising market, we believe our cross-platform data insight from Pay-TV, IPTV, Automotive and TiVo OS households will allow us to create and promote a unique and compelling offering for advertisers.
Connected Car Our HD Radio and DTS AutoStage solutions face competition from subscription-based digital service providers such as Sirius/XM, Pandora, Gracenote, and other digital audio and data service providers.
Connected Car Our HD Radio and DTS AutoStage solutions face competition from streaming and subscription-based digital service providers such as Sirius/XM, Pandora, Gracenote, and other digital audio, video and data service providers. Media Platform TiVo OS . We compete for Smart TV platform adoption with companies such as Roku, Alphabet, Inc’s Google TV and Amazon FireTV.
Video content delivery is rapidly shifting from linear broadcast to over-the-top (“OTT”) platforms, impacting not just how users consume content, but also the ad-supported programming ecosystem.
Video content delivery is rapidly shifting from linear broadcast to over-the-top (“OTT”) platforms, impacting not just how users consume content, but also the ad-supported programming ecosystem. Our technologies sit at the forefront of this transformation, enhancing consumer experiences where consumers spend the most time – in their homes and in their cars.
If the cable industry decided to cease providing CableCARD support for TiVo retail customers, recurring monthly retail services fees would be affected as customers would be likely to cancel TiVo service on their devices.
If the cable industry decided to cease providing CableCARD support for TiVo retail customers, recurring monthly retail service fees would be affected as customers would likely cancel the TiVo service on their devices. Human Capital Resources The opportunities for our success and growth depend in large part on our ability to attract, develop, and retain a talented and engaged workforce.
Through the IMAX Enhanced licensing program, consumers worldwide with best-in-class certified devices are able to experience IMAX’s expanded aspect ratio features and immersive DTS Sound on IMAX Enhanced content. In addition, our DTS Play-Fi technology leverages our audio and technology expertise to enable a variety of high-quality audio playback options across wireless speakers, set-top-boxes, TVs and mobile devices.
In addition, our DTS Play-Fi technology leverages our audio technology expertise to enable a variety of high-quality audio playback options across wireless speakers, set-top-boxes, TVs, and mobile devices.

… 64 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

119 edited+168 added−68 removed203 unchanged
Biggest changeRisks Related to our Business Operations • We may not be able to develop and timely deliver innovative technologies and services in response to changes in our markets and industries. • Our products and services face intense competition from various sources, and we may not be able to compete effectively. • Our success depends, in part, on discretionary consumer and corporate spending, and factors such as unusually high levels of inflation and risk of recession in the near term could have an adverse effect on our business. • We may not be able to manage our disparate business operations efficiently, which may lead to disposition of such business and related assets. • Our business depends, in part, on royalty-based and advertising-based revenue models, which are inherently risky. • Our licensees may delay, refuse to or be unable to make payments to us due to financial difficulties or otherwise, or shift their licensed products to other companies to lower their royalties to us. • It is difficult for us to verify royalty amounts owed to us under our licensing agreements, and this may cause us to lose revenue. • Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. • We face competitive risks in the provision of entertainment offerings involving the distribution of digital content provided by third-party application and content providers through broadband. • Our pursuit of acquisitions and divestitures may adversely affect our business operations or stock price if we cannot successfully execute our strategies. • Our business and results of operations have been, and are expected to continue to be, impacted by the global COVID-19 pandemic and resulting macroeconomic factors. • If we fail to protect and enforce our intellectual property rights, contract rights, or our confidential information, our business may suffer. • We may not be able to protect our brand from third-party infringement or increase our brand awareness. • Our business may suffer if third parties assert that our products or services violate their intellectual property rights. • We may not be able to maintain enough content released in the DTS audio format, which may reduce demand for our technologies, products, and services. 21 • Demand for our Connected Car technologies may be insufficient to sustain projected growth. • If we are unable to further penetrate the streaming and downloadable content delivery markets and adapt our technologies for those markets, our royalties and ability to grow our business could be adversely impacted. • The success of certain of our solutions depends on the interoperability of our technologies with consumer hardware devices. • Our failure to adequately manage our increasingly complex distribution agreements, including licensing, development and engineering services, may cause unexpected delays and loss of revenue in the deployment of advanced television solutions. • We make significant investments in new products and services that may not achieve technological feasibility or profitability or that may limit our growth. • Our products and services could be susceptible to errors, defects, or unintended performance problems that could result in lost revenue, liability or delayed or limited market acceptance. • Dependence on the cooperation of third parties for the provision and delivery of our metadata may adversely affect our revenue. • We depend on a limited number of third parties to design, manufacture, distribute and supply hardware devices upon which our TiVo software and service operate. • We maintain inventories of TiVo-branded products based on our demand forecast, which may be incorrect and lead to excess or insufficient inventory. • Qualifying, certifying and supporting our technologies, products and services is time-consuming and expensive. • We are exposed to the risks related to international sales and operations. • Uncertainty and instability resulting from the war between Russia and Ukraine could negatively impact our business, financial condition and operations. • Further deterioration of trade relations between the United States and China, other trade conflicts and barriers, economic sanctions, and national security protection policies could limit or prevent existing or potential customers from doing business with us. • Our systems, networks and online business activities and those of third parties that we utilize in our operations are subject to cybersecurity and stability risks, information technology system failures, and security breaches. • Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products subject to those licenses.
Biggest changeRisks Related to Our Business Operations • our ability to develop and timely deliver innovative technologies and services; • the highly competitive nature of our industry; • our relatively new monetization strategy may not be successful; • our ability to develop, maintain, and expand key relationships with TV OEMs and content publishers; • our ability to manage our disparate business operations efficiently; • our ability to generate revenues from royalty-based and advertising-based revenue models; • licensees delaying, refusing or being unable to make payments to us due to financial difficulties or otherwise; • the difficulty of verifying royalty amounts owed to us under our licensing agreements; • attracting and retaining the qualified and skilled employees needed to support our business; • competition in the provision of entertainment offerings involving the distribution of digital content provided by third-party application and content providers through broadband; • our ability to successfully execute acquisitions and divestitures; • our ability to maintain enough content released in the DTS audio format; • the sufficiency of demand for our Connected Car technologies to sustain projected growth; • our ability to penetrate the streaming and downloadable content delivery markets; • the interoperability of our technologies with consumer hardware devices; • our ability to adequately manage our increasingly complex distribution agreements; • investments in new products and services achieving technological feasibility or profitability; • errors, defects, or unintended performance problems that could render our products or services inoperable; • our dependence on the cooperation of third parties for the provision and delivery of our metadata; • our reliance on third parties to design, manufacture, distribute and supply hardware devices upon which our TiVo software and services operate; • our ability to forecast inventory levels; • the time and expense of qualifying, certifying and supporting our technologies, products and services; • our ability to expand our international sales and operations; Risks Related to Cybersecurity, Reliability, and Data Privacy • cybersecurity and stability risks, information technology system failures, and security breaches; • legal obligations and potential liability or reputational harm related to our collection, storage, and use of personal and confidential information; Risks Related to Intellectual Property • intellectual property infringement claims and litigation resulting in significant costs or the loss of important intellectual property rights; 15 • failure or inability to protect or enforce our intellectual property or proprietary rights; • failure to protect our brand from third-party infringement or increase our brand awareness; • our use of open source software; • our agreements to indemnify certain of our partners if our technology is alleged to infringe on third parties’ intellectual property rights; • governmental and industry standards that may significantly limit our business opportunities; Risks Related to Macroeconomic Conditions • the impact of macroeconomic conditions, natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events on our business; Risks Related to Financial Matters • the impairment of our goodwill and other intangible assets; • changes in our tax rates or exposure to additional tax assessments; Risks Related to Regulatory and Legal Matters • enactment of or changes to government regulation or laws related to our business; • U.S. or international rules (or the absence of rules) that permit internet access network operators to degrade users’ internet service speeds or limit internet data consumption by users; • liability for content that is distributed through or advertising that is served through our media platform; • compliance with broadcast laws and regulations; • compliance with anti-corruption or bribery laws; • our ability to maintain effective internal control over financial reporting; • compliance with laws and regulations related to the payment of income taxes and collection of indirect taxes; • changes to U.S. or foreign taxation laws or regulations; • litigation, claims, regulatory inquiries, investigations, and other legal proceedings; • evolving state and federal laws and regulations relating to our advertising, marketing and sales directly to consumers; • lack of regulations relating to the compatibility between cable systems and CE equipment; Risks Related to the Separation • our ability to achieve some or all of the benefits that we expect to achieve from our Separation; • failure of the Distribution to qualify for non-recognition treatment for U.S. federal income tax purposes; • indemnification liability if the Distribution and other related transactions are taxable to our Former Parent; • continuing contingent tax-related liabilities of our Former Parent; • adjustments of our tax accounts if our Former Parent utilizes certain pre-Separation tax attributes; • restrictions that we agreed to in order to preserve the tax-free treatment of the Distribution; • the unreliability of combined historical financial information as an indicator of future results as a standalone company; • our ability to enjoy the same benefits of diversity, leverage and market reputation as a standalone company; • our indemnification obligations to our Former Parent for certain liabilities, and our Former Parent’s ability to satisfy its indemnification obligations to us; • potential liabilities arising out of state and federal fraudulent conveyance laws and legal distribution requirements; • competition from our Former Parent; • our ability to achieve contractual terms from unaffiliated third parties; Risks Related to Ownership of Our Common Stock • uncertainty that an active trading market for our common stock will be sustained; • our inability to guarantee the timing, amount or payment of dividends, if any, on our common stock in the future; • dilution of a stockholder’s percentage of ownership in us in the future; • provisions in our charter and bylaws and in the Tax Matters Agreement that may prevent or delay an acquisition of us; • the limitations resulting from our selection of the Delaware Court of Chancery and the U.S. federal district courts as the exclusive forums for substantially all disputes between us and our stockholders; and • the limitations resulting from our status as an emerging growth company. 16 Risks Relating to Our Business Operations We may not be able to develop and timely deliver innovative technologies and services in response to changes in our markets and industries.
The markets for our products, services and technologies are characterized by rapid change and technological evolution and obsolescence, new and improved product introduction, changing consumer demand, an increasingly competitive landscape, and evolving industry standards.
The markets for our products, services and technologies are characterized by an increasingly competitive landscape, rapid change and technological evolution and obsolescence, new and improved product introduction, changing consumer demand, and evolving industry standards.
In addition, our online business activities depend on the ability to store and transmit confidential information and licensed intellectual property securely on our systems, third-party systems and over private, hybrid and public networks.
In addition, our online business activities depend on the ability to store and transmit confidential information and licensed intellectual property securely on our systems and third-party systems, and over private, hybrid and public networks.
Our storage and online transmissions and business activities are subject to a number of security and stability risks, including: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of customer information or intellectual property; • we could experience unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure or use of our products and services, or cause customer information or other sensitive information to be disclosed to a perpetrator, others or the general public; • someone could circumvent our security measures and misappropriate our information or our customers’ proprietary information or content or interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; • our computer systems could fail and lead to service interruptions or downtime for television, other media services, or websites, which may include e-commerce websites; • we could inadvertently disclose customer information; or • we may need to grow, upgrade, resize, reconfigure or relocate our data centers, or migrate to third-party cloud storage services, in response to changing business needs, which may be costly and lead to unplanned disruptions of service.
Our storage and online transmissions and business activities are subject to a number of security and stability risks, including: • our own or licensed encryption and authentication technology, or access or security procedures, may be compromised, breached or otherwise be insufficient to ensure the security of customer or user information or intellectual property; • we could experience unauthorized access, computer viruses, ransomware, system interference or destruction, “denial of service” attacks and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our websites and infrastructure or use of our products and services, or cause customer or user information or other sensitive information to be disclosed to a perpetrator, others or the general public; • someone could circumvent our security measures and misappropriate our information or our customers’ or users’ proprietary information or content or interrupt operations, or jeopardize our licensing arrangements, many of which are contingent on our sustaining appropriate security protections; • our computer systems could fail and lead to service interruptions or downtime for television, other media services, or websites, which may include e-commerce websites; • we could inadvertently disclose customer or user information; or • we may need to grow, upgrade, resize, reconfigure or relocate our data centers, or migrate to third-party cloud storage services, in response to changing business needs, which may be costly and lead to unplanned disruptions of service.
Under the Tax Matters Agreement, we are required to indemnify our Former Parent for the tax imposed under section 355(e) of the Code resulting from an acquisition or issuance of our stock, even if we did not participate in or otherwise facilitate the acquisition, 46 and this indemnity obligation might discourage, delay or prevent a change of control that our stockholders may consider favorable.
Under the Tax Matters Agreement, we are required to indemnify our Former Parent for the tax imposed under section 355(e) of the Code resulting from an acquisition or issuance of our stock, even if we did not participate in or otherwise facilitate the acquisition, and this indemnity obligation might discourage, delay or prevent a change of control that our stockholders may consider favorable.
Following the Mergers, and in anticipation of the Distribution, our Former Parent sought and received the IRS Ruling, which included a ruling from the IRS regarding the proper 41 manner and methodology for measuring the common ownership in the stock of our Former Parent, Pre-Merger Xperi and Pre-Merger TiVo for purposes of determining whether there has been a 50 percent or greater change of ownership under section 355(e) of the Code.
Following the Mergers, and in anticipation of the Distribution, our Former Parent sought and received the IRS Ruling, which included a ruling from the IRS regarding the proper manner and methodology for measuring the common ownership in the stock of our Former Parent, Pre-Merger Xperi and Pre-Merger TiVo for purposes of determining whether there has been a 50 percent or greater change of ownership under section 355(e) of the Code.
Although the Former Parent board of directors intended to make the Distribution out of the Former Parent’s surplus and received an opinion that the Former Parent has adequate surplus under Delaware law to declare the 44 dividend of our common stock in connection with the Distribution, there can be no assurance that a court will not later determine that some or all of the Distribution was unlawful.
Although the Former Parent board of directors intended to make the Distribution out of the Former Parent’s surplus and received an opinion that the Former Parent has adequate surplus under Delaware law to declare the dividend of our common stock in connection with the Distribution, there can be no assurance that a court will not later determine that some or all of the Distribution was unlawful.
We will remain an emerging growth company for up to five years, although we will lose that 47 status sooner if we have more than $1.235 billion of revenue in a fiscal year, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion of non-convertible debt over a three-year period.
We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.235 billion of revenue in a fiscal year, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion of non-convertible debt over a three-year period.
Demand for and adoption of our Connected Car technologies, including HD Radio, DTS AutoStage, and DTS AutoSense, may not be sufficient for us to continue to increase the number of customers for these technologies, which include IC manufacturers, manufacturers of broadcast transmission equipment, consumer electronics product manufacturers, component manufacturers, data service providers, manufacturers of specialized and test equipment and radio broadcasters, automobile manufacturers and Tier 1 suppliers to automobile manufacturers.
Demand for and adoption of our Connected Car technologies, including HD Radio and DTS AutoStage, may not be sufficient for us to continue to increase the number of customers for these technologies, which include IC manufacturers, manufacturers of broadcast transmission equipment, consumer electronics product manufacturers, component manufacturers, data service providers, manufacturers of specialized and test equipment and radio broadcasters, automobile manufacturers and Tier 1 suppliers to automobile manufacturers.
This freedom of choice on the part of online content providers could limit our ability to grow if such content providers do not incorporate our technologies into their services, which could affect demand for our technologies. 31 Furthermore, our inclusion in mobile and other network-connected devices may be less profitable for us than optical disc players.
This freedom of choice on the part of online content providers could limit our ability to grow if such content providers do not incorporate our technologies into their services, which could affect demand for our technologies. Furthermore, our inclusion in mobile and other network-connected devices may be less profitable for us than optical disc players.
For so long as we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. We cannot predict whether investors will find our common stock less attractive because we will rely on these exemptions.
For so long as we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. We cannot predict whether investors will find our common stock less attractive because we will rely on these 46 exemptions.
Fraudulent conveyances or transfers are generally defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due.
Fraudulent conveyances or transfers are generally defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay 43 its debts as they become due.
Therefore, we face exposure to risks of operating in many foreign countries, including: • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • fluctuations in foreign currency exchange rates; 34 • restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the United States; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; • political and economic instability, trade conflict and international hostilities; • unexpected changes in political or regulatory environments; • differing employment practices, labor compliance and costs associated with a global workforce; • exchange controls or other restrictions; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries and international operations; and • difficulties in obtaining approval for significant transactions.
Therefore, we face exposure to risks of operating in many foreign countries, including: 26 • difficulties and costs associated with complying with a wide variety of complex laws, treaties, regulations and compliance requirements; • fluctuations in foreign currency exchange rates; • restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the United States; • earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs; • political and economic instability, trade conflict and international hostilities; • unexpected changes in political or regulatory environments; • differing employment practices, labor compliance and costs associated with a global workforce; • exchange controls or other restrictions; • import and export restrictions and other trade barriers; • difficulties in maintaining overseas subsidiaries and international operations; and • difficulties in obtaining approval for significant transactions.
We often take steps to disclose source code for which disclosure is required under an open source license, but it is possible that we have or will make mistakes in doing so, which could negatively impact our brand or our adoption in the community, or could expose us to additional liability.
We often take steps to disclose source code for which disclosure is required under an open source license, but it is possible that we have or will make mistakes in doing so, which 32 could negatively impact our brand or our adoption in the community, or could expose us to additional liability.
If our Former Parent should utilize such attributes, we may be required to adjust our tax accounts which may negatively impact our financial results. We agreed to numerous restrictions to preserve the tax-free treatment of the Distribution and certain related transactions in the United States, which may reduce our strategic and operating flexibility.
If our Former 41 Parent should utilize such attributes, we may be required to adjust our tax accounts which may negatively impact our financial results. We agreed to numerous restrictions to preserve the tax-free treatment of the Distribution and certain related transactions in the United States, which may reduce our strategic and operating flexibility.
Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable or other intangible assets may not be recoverable include a decline in future cash flows, fluctuations in market capitalization, slower growth rates in our industry or slower than anticipated adoption of our products by our customers.
Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable or other intangible assets may not be recoverable 34 include a decline in future cash flows, fluctuations in market capitalization, slower growth rates in our industry or slower than anticipated adoption of our products by our customers.
The loss of these economies of scope and scale could have an adverse effect on our business, financial condition and results of operations. • Other significant changes have occurred in our cost structure, management, financing and business operations as a result of the Separation and Distribution and our operating as a company separate from our Former Parent.
The loss of these economies of scope and scale could have an adverse effect on our business, financial condition and results of operations. 42 • Other significant changes have occurred in our cost structure, management, financing and business operations as a result of the Separation and Distribution and our operating as a company separate from our Former Parent.
In certain jurisdictions, we may be unable to protect our technology and intellectual property adequately against unauthorized use, which may adversely affect our business, financial condition and results of operations. 29 We may not be able to protect our brand from third-party infringement or increase our brand awareness.
In certain jurisdictions, we may be unable to protect our technology and intellectual property adequately against unauthorized use, which may adversely affect our business, financial condition and results of operations. We may not be able to protect our brand from third-party infringement or increase our brand awareness.
For example, consumers who activate new monthly subscriptions to the TiVo service may be required to commit to pay for the TiVo service for a minimum of one year or be subject to an early termination fee if they terminate prior to the expiration of their commitment period.
For example, consumers who activate new monthly subscriptions to the TiVo Pay-TV service may be required to commit to pay for the service for a minimum of one year or be subject to an early termination fee if they terminate prior to the expiration of their commitment period.
These new products could be copied or functionally surpassed by other designers, manufacturers, or innovators, some of whom may have far greater financial resources than us, and who may be able to develop products with greater capabilities or lower cost.
These products could be copied or functionally surpassed by other designers, manufacturers, or innovators, some of whom may have far greater financial resources than us, and who may be able to develop products with greater capabilities or lower cost.
As part of our Former Parent, our business had 43 been able to leverage the historical market reputation and performance of our Former Parent and its businesses’ brand identities, which allowed us to, among other things, recruit and retain key personnel to run our business.
As part of our Former Parent, our business had been able to leverage the historical market reputation and performance of our Former Parent and its businesses’ brand identities, which allowed us to, among other things, recruit and retain key personnel to run our business.
Any acquisitions or issuances of Xperi 42 Inc. common stock within a two-year period after the Distribution generally are presumed to be part of such a plan that includes the Distribution, although such presumption may be rebutted.
Any acquisitions or issuances of Xperi Inc. common stock within a two-year period after the Distribution generally are presumed to be part of such a plan that includes the Distribution, although such presumption may be rebutted.
We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying 37 value may not be recoverable or the useful life is shorter than originally estimated.
We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable or the useful life is shorter than originally estimated.
Any such defects, errors, or unintended performance problems in existing or new products or services, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costs and increased service costs, any of which could materially harm our business, financial condition and results of operation.
Any such defects, errors, or unintended performance problems in existing or new products or services, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costs and increased service costs, any of which could materially harm our business, financial condition and results of operations.
If the terms of our subscription service contracts with consumers, such as our imposition of an early termination fee, or sweepstakes, rebate or gift subscription programs were to violate state or federal laws or regulations, we could be subject to lawsuits, penalties, enforcement actions, and/or negative publicity in which case our business, financial condition and results of operations could be harmed.
If the terms of our subscription service contracts with consumers, such as auto-renewals or our imposition of an early termination fee, or sweepstakes, rebate or gift subscription programs were to violate state or federal laws or regulations, we could be subject to lawsuits, penalties, enforcement actions, and/or negative publicity in which case our business, financial condition and results of operations could be harmed.
Despite our efforts, we: • may not receive significant revenue from our current research and development efforts for several years, if at all; • cannot ensure that the level of funding and significant resources we are committing for investments in new products, services and technologies will be sufficient or result in successful new products, services or technologies; • cannot ensure that our newly developed products, services or technologies can be successfully protected as proprietary intellectual property rights or will not infringe the intellectual property rights of others; • cannot ensure that any new products or services that we develop will achieve market acceptance; • cannot prevent our products, services and technologies from becoming obsolete due to rapid advancements in technology and changes in consumer preferences; • cannot ensure that revenue from new products, services or technologies will offset any decline in revenue from our products, services and technologies which may become obsolete; • cannot ensure that our competitors and/or potential customers may not develop products, services or technologies similar to those developed by us, resulting in a reduction in the potential demand for our newly developed products, services or technologies; and • may not correctly identify new or changing market trends at an early enough stage to capitalize on market opportunities.
Despite our efforts, we: • may not receive significant revenue from our current research and development efforts for several years, if at all; • cannot ensure that the level of funding and significant resources we are committing for investments in new products, services and technologies will be sufficient or result in successful new products, services or technologies; • cannot ensure that any new products or services that we develop will achieve market acceptance; • cannot ensure that these new products, services or technologies will be as profitable as expected, if at all, even if we achieve market acceptance; • cannot ensure that our newly developed products, services or technologies can be successfully protected as proprietary intellectual property rights or will not infringe the intellectual property rights of others; • cannot prevent our products, services and technologies from becoming obsolete due to rapid advancements in technology and changes in consumer preferences; • cannot ensure that revenue from new products, services or technologies will offset any decline in revenue from our products, services and technologies which may become obsolete; • cannot ensure that our competitors and/or potential customers will not develop products, services or technologies similar to those developed by us, resulting in a reduction in the potential demand for our newly developed products, services or technologies; and • may not correctly identify new or changing market trends at an early enough stage to capitalize on market opportunities.
We have made and will continue to make significant investments in research, development, and marketing of new technologies, products and services, including audio, imaging and media, as well as through our Perceive subsidiary and its hardware and software solutions for high-performance inference at the edge. Investments in new technologies are speculative and technological feasibility may not be achieved.
We have made and will continue to make significant investments in research, development, and marketing of new technologies, products and services, including audio and media, as well as through our Perceive subsidiary and its hardware and software solutions for high-performance inference at the edge. Investments in new technologies are speculative and technological 24 feasibility may not be achieved.
In such a case, the desirability of our products to our customers could be reduced, thus harming our business, financial condition and results of operation. We also rely on third parties to whom we outsource supply chain activities related to inventory warehousing, order fulfillment, distribution and other direct sales logistics to provide cost-effective and efficient supply chain services.
In such a case, the desirability of our products to our customers could be reduced, thus harming our business, financial condition, and results of operations. We also rely on third parties to whom we outsource supply chain activities related to inventory warehousing, order fulfillment, distribution, and other direct sales logistics to provide cost-effective and efficient supply chain services.
Standards sometimes require implementors or contributors to offer to license their relevant intellectual property on reasonable and non-discriminatory terms (RAND) or on fair, reasonable, and non-discriminatory terms (FRAND), but if standards that may apply to our technologies start requiring implementors or contributors to license their relevant intellectual property on a reasonable and non-discriminatory, zero royalty (RAND-Z) or reasonable and non-discriminatory, royalty free (RAND-RF) basis, it may affect our ability to be compensated for our technologies that may be included in such standards.
Standards sometimes require implementers or contributors to offer to license their relevant intellectual property on reasonable and non-discriminatory terms (RAND) or on fair, reasonable, and non-discriminatory terms (FRAND), but if standards that may apply to our technologies start requiring implementers or contributors to license their relevant intellectual property on a reasonable and non-discriminatory, zero royalty (RAND-Z) or reasonable and non-discriminatory, royalty free (RAND-RF) basis, it may affect our ability to be compensated for our technologies that may be included in such standards.
Additionally, our business could be materially adversely affected if foreign markets do not continue to develop, if we do not receive additional orders to supply our technologies, products or services for use by international pay TV service providers, TV, CE and set-top-box manufacturers, PPV/VOD providers and others, or if regulations governing our international business change.
Additionally, our business could be materially adversely affected if foreign markets do not continue to develop, if we do not receive additional orders to supply our technologies, products or services for use by international Pay-TV service providers, TV OEMs, automobile, CE and set-top-box manufacturers, PPV/VOD providers and others, or if regulations governing our international business change.
The occurrence of any of these or similar events could damage our business, hurt our ability to distribute products and services and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity protections and enhancements or to remedy damages caused by breaches or disruptions, and expose us to litigation and other liabilities.
The occurrence of any of these or similar events could damage our business, hurt our ability to distribute products and services and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity protections and enhancements or to remedy damages caused by breaches or disruptions, and expose us to litigation, government investigations, and other liabilities.
Much of the promotion of our brand depends, among other things, on hardware device manufacturing companies and service providers displaying our trademarks on their products.
Much of the promotion of our brand depends, among other things, on OEMs, hardware device manufacturing companies and service providers displaying our trademarks on their products.
The Separation and Distribution are expected to provide the following benefits, among others: • eliminating competing priorities for capital allocation between the Former Parent’s product and IP licensing businesses; • enabling our management team to better focus on strengthening our core businesses and operations; • enhancing operational flexibility for our businesses, particularly in dealing with suppliers and customers; • streamlining the investment profiles to our business and may enhance their marketability; • improving access to talent by allowing us to capitalize on our distinct cultures and recruitment strategies.
The Separation and Distribution were expected to provide the following benefits, among others: • eliminating competing priorities for capital allocation between the Former Parent’s product and IP licensing businesses; • enabling our management team to better focus on strengthening our core businesses and operations; • enhancing operational flexibility for our businesses, particularly in dealing with suppliers and customers; • streamlining the investment profiles of our business and may enhance their marketability; and • improving access to talent by allowing us to capitalize on our distinct cultures and recruitment strategies.
Our failure to adequately manage our increasingly complex distribution agreements, including licensing, development and engineering services, may cause unexpected delays and loss of revenue in the deployment of advanced television solutions. In connection with our deployment arrangements for TiVo products, we engage in complex licensing, development and engineering services arrangements with our marketing partners and distributors.
Our failure to adequately manage our increasingly complex distribution agreements, including licensing, development and engineering services, may cause unexpected delays and loss of revenue in the deployment of advanced television solutions. In connection with our deployment arrangements for TiVo Pay-TV products, we engage in complex licensing, development and engineering services arrangements with our marketing partners and distributors.
In addition, if major industry participants form strategic relationships that exclude us, our business, financial condition, results of operations and prospects could be materially adversely affected. Our pursuit of acquisitions and divestures may adversely affect our business operations or stock price if we cannot successfully execute our strategies.
In addition, if major industry participants form strategic relationships that exclude us, our business, financial condition, results of operations and prospects could be materially adversely affected. Our pursuit of acquisitions and divestitures may adversely affect our business operations or stock price if we cannot successfully execute our strategies.
Recent rapid transformation in licensing and distribution of digital content has made the industry less 27 predictable and more volatile and if we are unable to adapt to developments in the space our business, financial condition and results of operations may be harmed.
Recent rapid transformation in licensing and distribution of digital content has made the industry less predictable and more volatile and if we are unable to adapt to developments in this space, our business, financial condition and results of operations may be harmed.
We will need to continue to find and hire qualified and experienced personnel to advance this new business. In addition, chip technologies such as those we are developing are subject to supply chain disruptions, cost pressures, extensive competition, and a relentless pace of innovation.
We will need to continue to find and hire qualified and experienced personnel to advance this business. In addition, technologies such as those we are developing are subject to supply chain disruptions, cost pressures, extensive competition, and a relentless pace of innovation.
A constantly evolving network of state and federal laws is increasingly regulating these promotional activities. Additionally, we enter into subscription service contracts directly with consumers which govern both our provision of and the consumers' payment for the TiVo service.
A constantly evolving network of state and federal laws is increasingly regulating these promotional activities. Additionally, we enter into subscription service contracts directly with consumers which govern both our provision of and the consumers' payment for the TiVo Pay-TV service.
If we fail to achieve some or all of the 40 benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be materially and adversely affected.
If we fail to achieve some or all of the benefits that we expected to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be materially and adversely affected.
Also, hackers may, for financial gain or other motives, seek to infiltrate or damage our systems, or obtain sensitive business information or customer information. We also may be exposed to 36 customer claims, or other liability, in connection with any security breach or inadvertent disclosure.
Also, hackers may, for financial gain or other motives, seek to infiltrate or damage our systems, or obtain sensitive business information or customer or user information. We also may be exposed to customer or user claims, or other liability, in connection with any security breach or inadvertent disclosure.
Some of the products we support and some of our proprietary technologies incorporate open source software such as open source codecs that may be subject to the Lesser GNU Public License or other open source licenses.
Some of the products we support and some of our proprietary technologies incorporate open source software such as open source code that may be subject to the Lesser GNU Public License or other open source licenses.
Advertising-related revenue may be based upon, among other things, the number of viewers who watch a particular service, availability of inventory, advertiser interest and opportunities to personalize advertisements.
Advertising-related revenue may be based upon, among other things, the number of users who watch a particular service, availability of inventory, advertiser interest and opportunities to personalize advertisements.
Any additional rules and 38 regulations imposed on digital audio broadcasting may adversely impact the attractiveness of HD Radio technology and negatively impact our business, financial condition and results of operations.
Any additional laws, rules and regulations imposed on digital audio broadcasting may adversely impact the attractiveness of HD Radio technology and negatively impact our business, financial condition and results of operations.
Accordingly, our revenue could decline if these providers elect not to incorporate DTS audio into their content or if they sell less content that incorporates DTS audio. In addition, we may not be successful in maintaining existing relationships or developing new relationships with other existing or new content providers.
Accordingly, our revenue could decline if these providers elect not to incorporate DTS audio into their content or if they sell less content that incorporates DTS audio. 22 In addition, we may not be successful in maintaining existing relationships or developing new relationships with partners or content providers.
Events triggering an indemnification obligation under the Tax Matters Agreement include events occurring after the Distribution that cause our Former Parent to recognize a gain under section 355(e) of the Code, as discussed further below. Such tax amounts could be significant.
Events triggering an indemnification obligation under the Tax Matters Agreement include events occurring after the Distribution that cause our Former Parent to recognize a gain under section 355I of the Code, as discussed further below. Such tax amounts could be significant.
We face competitive risks across all our business, including: • our Media Platform faces significant competition from companies that produce and market TV operating systems, program guides as well as television schedule information in a variety of formats, including passive and interactive on-screen electronic guide services, online listings, over the top applications and against customers and potential customers who choose to build their own TV operating systems or interactive program guide; • our advanced video solutions compete with other CE products and home entertainment services (such as Roku, AppleTV, Amazon FireTV and Chromecast) as well as products and service offerings built by other service providers or their suppliers for consumer spending; • our Smart TV solutions compete with other operating systems for Smart TVs, including TV manufacturers with their own in-house solutions (e.g., Samsung with Tizen) or TV manufacturers that use competing third-party solutions (e.g., Google TV). • our Consumer Electronics and audio technologies compete with other providers of audio products and services such as Dolby and Sonos, with Dolby being the primary competitor in high-definition audio processing and enjoying advantages in selling its digital multi-channel audio technology, having introduced such technology before we did and having achieved mandatory standard status in product categories that we have not, including terrestrial digital TV broadcasts in the United States; • our Connected Car technologies compete with internal design groups of automotive manufacturers and other automobile technology suppliers that provide similar technologies by employing different approaches; • our embedded image processing technologies compete with other image processing software vendors such as SmartEye, Seeing Machines and ArcSoft, Inc., as well as internal design groups of automotive, mobile phone, and digital camera manufacturers; and • our competitive position is affected by the rate of adoption and incorporation of our technologies by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the automotive and surveillance industry.
We face competitive risks across all our businesses, including: • our Media Platform and Pay-TV solutions face significant competition from companies that produce and market TV operating systems, program guides and television schedule information in a variety of formats, including passive and interactive on-screen electronic guide services, online listings, over the top applications and against customers and potential customers who choose to build their own TV operating systems or interactive program guide; • our advanced video solutions compete with other CE products and home entertainment services (such as Roku, AppleTV, Amazon FireTV and Chromecast) as well as products and service offerings built by other service providers or their suppliers for consumer spending; • our Smart TV solutions compete with other operating systems for Smart TVs, including TV manufacturers with their own in-house solutions (e.g., Samsung with Tizen) or TV manufacturers that use competing third-party solutions (e.g., Google TV). • our Consumer Electronics and audio technologies compete with other providers of audio products and services such as Dolby and Sonos, with Dolby being the primary competitor in high-definition audio processing and enjoying advantages in selling its digital multi-channel audio technology, having introduced such technology before we did and having achieved mandatory standard status in product categories that we have not, including terrestrial digital TV broadcasts in the United States; • our Connected Car technologies compete with internal design groups of automotive manufacturers and other automobile technology suppliers that provide similar technologies by employing different approaches; and • our competitive position is affected by the rate of adoption and incorporation of our technologies by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the automotive and surveillance industry.
Potential customers may also be hesitant in adopting new chip technologies or hardware and may instead turn to competitors who offer 32 competing products in different deployment models. Our technologies may also require potential customers to adapt their existing software to fully realize their advantages.
Potential customers may also be hesitant in adopting new technologies and may instead turn to competitors who offer competing products in different deployment models. Our technologies may also require potential customers to adapt their existing software to fully realize their advantages.
We will need to continue to expend considerable resources on research and development in the future in order to continue to design, deliver and enhance innovative audio, imaging, media, entertainment, and semiconductor products, services and technologies.
We will need to continue to expend considerable resources on research and development in the future in order to continue to design, deliver and enhance innovative media, entertainment, audio, and machine learning products, services and technologies.
If these third parties choose not to support integration efforts or delay the integration of our solutions, our business, financial condition and results of operations could be harmed. Relationships have historically played an important role in the entertainment industries that we serve.
Delays, errors or omissions in this information could harm our business. If these third parties choose not to support integration efforts or delay the integration of our solutions, our business, financial condition and results of operations could be harmed. Relationships have historically played an important role in the entertainment industries that we serve.
Demand for our automotive technologies, including HD Radio, DTS AutoStage, and DTS AutoSense, also may be impacted by declines in the automotive industry which historically has been cyclical and experienced downturns during declining economic conditions. The persistent downturn in the automotive markets resulting from the COVID-19 pandemic and related events reduced demand for these technologies.
Demand for our automotive technologies also may be impacted by declines in the automotive industry, which historically has been cyclical and experienced downturns during declining economic conditions. The persistent downturn in the automotive markets resulting from the COVID-19 pandemic and related events reduced demand for these technologies.
Pursuant to our amended and restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of Delaware or our amended and restated certificate of incorporation or bylaws (each, as in effect from time to time), or (iv) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware, in each such case, unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us. 45 Pursuant to our amended and restated certificate of incorporation, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of Delaware or our amended and restated certificate of incorporation or bylaws (each, as in effect from time to time), or (iv) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks subject matter jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware, in each such case, unless the Court of Chancery (or such other state or federal court located within the State of Delaware, as applicable) has dismissed a prior action by the same plaintiff asserting the same claims because such court lacked personal jurisdiction over an indispensable party named as a defendant therein.
Our future success will depend, in part, upon the ability of our management team to manage any growth effectively, requiring our management to: • recruit, hire, and train additional personnel; • implement and improve our operational and financial systems, procedures, and controls; • maintain our cost structure at an appropriate level based on the royalties, revenue and cash we forecast and generate; 28 • manage multiple concurrent development projects; and • manage operations in multiple time zones with different cultures and languages.
Our future success will depend, in part, upon the ability of our management team to manage such changes effectively, requiring our management to: • recruit, hire, and train additional personnel, or effectively manage the transition of exiting personnel; • transition and improve our operational and financial systems, procedures, and controls; • maintain our cost structure at an appropriate level based on the royalties, revenue and cash we forecast and generate; • manage multiple concurrent development projects; and • manage operations in multiple time zones with different cultures and languages.
Certain of our TiVo products rely on multiple systems operator support of CableCARD. We depend on significant cooperation with manufacturers of these devices and the components integrated into these devices, as well as software providers that create the operating systems for such devices, to incorporate certain of our technologies into their product offerings and ensure consistent playback of encoded files.
We depend on significant cooperation with manufacturers of these devices and the components integrated into these devices, as well as software providers that create the operating systems for such devices, to incorporate certain of our technologies into their product offerings and ensure consistent playback of encoded files.
It is unclear what rules and regulations the FCC may adopt regarding digital audio broadcasting and what effect, if any, such rules and regulations will have on our product licensing business, the operations of stations using our HD Radio technology or consumer electronics manufacturers.
It is unclear what laws, rules and regulations may be adopted regarding digital audio broadcasting and what effect, if any, such laws, rules and regulations will have on our business, the operations of stations using our HD Radio technology, or consumer electronics manufacturers.
We may not realize the anticipated benefits of acquisitions we may complete in the future, and we may not be able to incorporate any acquired services, products or technologies with our existing operations, or integrate personnel from the acquired businesses, in which case our business, financial condition and results of operations could be harmed.
We may not realize the anticipated benefits of acquisitions or divestitures we may complete in the future, and we may not be able to successfully incorporate or separate the applicable services, products, or technologies, or integrate or separate personnel from the applicable businesses, in which case our business, financial condition and results of operations could be harmed.
The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • our quarterly or annual earnings, or those of other companies in our industry; • the failure of securities analysts to cover our common stock; • actual or anticipated fluctuations in our operating results; 45 • changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance; • the operating and stock price performance of other comparable companies; • overall market fluctuations and domestic and worldwide economic conditions; and • other factors described in these “Risk Factors” and elsewhere herein.
The market price of our common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including: • our quarterly or annual earnings, or those of other companies in our industry; • the failure of securities analysts to cover our common stock; • actual or anticipated fluctuations in our operating results; • changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance; • the operating and stock price performance of other comparable companies; • overall market fluctuations and domestic and worldwide economic conditions; and • other factors described in these “Risk Factors” and elsewhere herein. 44 Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company.
We face risks inherent in royalty-based and/or advertising-based business models, many of which are outside of our control, such as the following: • the number of subscribers our Pay-TV customers have or the number of set top boxes our Pay-TV customers provide to their end-user subscribers; • the number of end users and time spent viewing content and advertising available within devices that incorporate our licensed technology; • the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the TV, automotive, consumer electronics, and surveillance industries; • the willingness and ability of suppliers to produce materials and equipment that support our licensed technology in a quantity sufficient to enable volume manufacturing; • the willingness and ability of advertisers to use our advertising placements that are available via our licensed technology; • the willingness and ability of content owners and content aggregators to make their content available via our licensed technology; • the willingness and ability of advertising technology partners to license their products and services to us for use in our licensed technology; • ability of our customers to purchase such materials and equipment on a cost-effective and timely basis; • the length of the design cycle and the ability of us and our customers to successfully integrate certain of our technologies into integrated circuits; • the demand for products that incorporate our licensed technology; • the cyclicality of supply and demand for products using our licensed technology; • the seasonal nature of advertising consumption and the associated variance to revenue based on those changes; • the impact of economic downturns; and • the impact of poor financial performance of our customers. 26 For example, the ability to enjoy digital entertainment content downloaded or streamed over the internet has caused some consumers to elect to cancel their Pay-TV subscriptions.
We face risks inherent in royalty-based and/or advertising-based business models, many of which are outside of our control, such as the following: • the number of subscribers our Pay-TV customers have or the number of set top boxes our Pay-TV customers provide to their end-user subscribers; • the number of end users and time spent viewing content and advertising available within devices that incorporate our licensed technology; 19 • the rate of adoption and incorporation of our technology by semiconductor manufacturers, assemblers, foundries, manufacturers of consumer and communication electronics, and the TV, automotive, consumer electronics, and surveillance industries; • the willingness and ability of advertisers to use our advertising placements that are available via our licensed technology; • the allocation by advertisers of their budgets to traditional advertising, such as traditional television, radio and print, and to advertising through social media and other digital platforms; • the willingness and ability of content owners and content aggregators to make their content available via our licensed technology; • the willingness and ability of advertising technology partners to license their products and services to us for use in our licensed technology; • the willingness and ability of suppliers to produce materials and equipment that support our licensed technology in a quantity sufficient to enable volume manufacturing; • ability of our customers to purchase such materials and equipment on a cost-effective and timely basis; • the length of the design cycle and our customers’ ability to successfully integrate certain of our technologies into integrated circuits; • the demand for products that incorporate our licensed technology; • the cyclicality of supply and demand for products using our licensed technology; • the seasonal nature of advertising consumption and the associated variance to revenue based on those changes; • the impact of economic downturns and labor disruptions such as strikes; and • the impact of poor financial performance of our customers.
Risks relating to Ownership of our Common Stoc k If we fail to maintain effective internal control over financial reporting, our ability to produce accurate financial statements could be impaired, which could increase our operating costs and affect our ability to operate our business.
If we fail to maintain effective internal control over financial reporting, our ability to produce accurate financial statements could be impaired, which could increase our operating costs and affect our ability to operate our business.
Additionally, certain features and functionalities of our TiVo service and DVRs depend on third-party components and technologies. If we or our third-party partners are unable to purchase or license such third-party components or technologies, we may not be able to offer certain related features and functionalities to our customers.
Additionally, certain features and functionalities of our TiVo OS, TiVo service, and DVRs and non-DVR set-top-boxes that incorporate our software depend on third-party components and technologies. If we or our third-party partners are unable to purchase or license such third-party components or technologies, we may not be able to offer certain related features and functionalities to our customers.
If we are unable to hire and retain qualified employees, or conversely, if we fail to manage employee performance or reduce staffing levels when required by market conditions, our business, financial condition and results of operations could be adversely affected.
Volatility in our stock price may from time to time adversely affect our ability to recruit or retain employees. If we are unable to hire and retain qualified employees, or conversely, if we fail to manage employee performance or reduce staffing levels when required by market conditions, our business, financial condition and results of operations could be adversely affected.
For example, the FCC could determine that certain of our products fail to comply with regulations concerning matters such as electrical interference, copy protection, digital tuners, accessibility for blind and deaf users, or display of television programming based on rating systems.
For example, regulators could determine that certain of our products or services fail to comply with regulations concerning matters such as electrical interference, copy protection, digital tuners, accessibility for blind and deaf users, emergency alerts, broadcast regulations, online marketplace regulations, operations regulations, or display of television programming based on content rating systems.
Further, as an independent public company, we may be more susceptible to market fluctuations and other adverse events and our business is less diversified than when we were part of our Former Parent.
However, we may be unable to achieve some or all of these benefits. As an independent public company, we may be more susceptible to market fluctuations and other adverse events and our business is less diversified than when we were part of our Former Parent.
To be successful, we design certain of our solutions to interoperate effectively with a variety of consumer hardware devices, including PCs, tablets, smartphones, TVs, set-top boxes, video game consoles, MP3 devices, multi-media storage devices, portable media players, DVD players and recorders, Blu-ray players, digital still cameras, and digital camcorders.
To be successful, we design certain of our solutions to interoperate effectively with a variety of consumer hardware devices, including PCs, tablets, smartphones, TVs, set-top boxes, video game consoles, MP3 devices, multi-media storage devices, portable media players, DVD players and recorders, and Blu-ray players. Certain of our TiVo products rely on multiple systems operator support of CableCARD.
Risks Relating to the Separation We may be unable to achieve some or all of the benefits that we expect to achieve from our Separation. We may not be able to achieve the full strategic, financial, operational or other benefits expected to result from the Separation, or such benefits may be delayed or not occur at all.
We may not be able to achieve the full strategic, financial, operational, or other benefits expected to result from the Separation, or such benefits may be delayed or not occur at all.
Our inability to renew these existing arrangements on terms that are favorable to us, or enter into alternative arrangements that allow us to effectively provide and transmit our metadata to customers, could have a material adverse effect on our businesses that leverage metadata, including our interactive program guide business, and could damage the attractiveness of our metadata offerings to our customers or could increase the costs associated with providing our metadata offerings, and cause our revenue or margins to decline, which would adversely impact business, financial condition and results of operation.
Our inability to renew existing arrangements on terms that are favorable to us, or enter into alternative arrangements that allow us to effectively provide and transmit our metadata to customers, could have a material adverse effect on our businesses that leverage metadata, including our interactive program guide business, and could damage the attractiveness of our metadata offerings to our customers or could increase the costs associated with providing our metadata offerings, and cause our revenue or margins to decline, which would adversely impact business, financial condition and results of operations. 25 We depend on a limited number of third parties to design, manufacture, distribute and supply hardware devices upon which our TiVo software and services operate.
If we fail to protect and enforce our intellectual property rights, contract rights, or our confidential information, our business may suffer. We rely primarily on a combination of license, development and nondisclosure agreements and other contractual provisions, as well as patent, trademark, trade secret and copyright laws, to protect our technology and intellectual property.
We rely primarily on a combination of license, development and nondisclosure agreements and other contractual provisions, as well as patent, trademark, trade secret and copyright laws, to protect our technology and intellectual property.
Technology standards are important in the audio and video industry as they help to assure compatibility across a system or series of products.
Current and future governmental and industry standards may significantly limit our business opportunities. Technology standards are important in the audio and video industry as they help to assure compatibility across a system or series of products.
We may also incur other significant liabilities and costs associated with disposal or discontinuance of product lines or business divisions, or separation of business units, including employee severance costs, relocation expenses, and impairment of lease obligations and long-lived assets. The effects of such actions may adversely impact our business, financial condition and results of operations.
We may also incur other significant liabilities and costs associated with disposal or discontinuance of product lines or business divisions, or separation of business units, including employee severance costs, relocation expenses, impairment of lease obligations and long-lived assets, and expenses associated with tax, legal and financial advisers.
Our license compliance program audits certain customers to review the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty to which we are entitled under the terms of our license agreements, but we cannot ensure that such audits will be effective to that end.
Our license compliance program audits certain customers to review the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty to which we are entitled under the terms of our license agreements, but we cannot ensure that such audits will be effective to that end. 20 Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business.
Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business. Our future success depends, in part, upon our ability to recruit and retain key management, technical, sales, marketing, finance, and other critical personnel.
Our future success depends, in part, upon our ability to recruit and retain key management, technical, sales, marketing, finance, and other critical personnel. Competition for qualified management, technical and other personnel is intense, and we may not be successful in attracting and retaining such personnel.
Our business depends, in part, on royalty-based and advertising-based revenue models, which are inherently risky. Our business is dependent, in part, on future royalties and/or advertising revenues paid to us by customers and partners.
The effects of such actions may adversely impact our business, financial condition and results of operations. Our business depends, in part, on royalty-based and advertising-based revenue models, which are inherently risky. Our business is dependent, in part, on future royalties and/or advertising revenues paid to us by customers and partners.
Disposing or discontinuing existing product lines or business 25 divisions, or separating business units, provides no assurance that operating expenses will be reduced or will not cause us to incur material charges associated with such decisions.
Additionally, as business strategy and product markets continue to evolve, we may dispose, discontinue, or divest product lines or business divisions. Disposing or discontinuing existing product lines or business divisions, or separating business units, provides no assurance that operating expenses will be reduced or will not cause us to incur material charges associated with such decisions.
Our Former Parent is separately responsible for any taxes that arise from the failure of the Distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to our Former Parent’s or its affiliates’ stock, assets or business, or any breach of its representations, covenants or obligations under the Tax Matters Agreement (or any other agreement entered into in connection with the Separation and Distribution), the materials submitted to the IRS in connection with the IRS Ruling or the representations made in the representation letter provided to counsel in connection with the Tax Opinion.
Our Former Parent is separately responsible for any taxes that arise from the failure of the Distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to our Former Parent’s or its affiliates’ stock, assets or business, or any breach of its representations, covenants or obligations under the Tax Matters Agreement (or any other agreement entered into in connection with the Separation and Distribution), the materials submitted to the IRS in connection with the IRS Ruling or the representations made in the representation letter provided to counsel in connection with the Tax Opinion. 40 If the Distribution fails to qualify for non-recognition treatment for U.S. federal income tax purposes for certain reasons relating to the overall structure of the Mergers and the Distribution, then under the Tax Matters Agreement, we and our Former Parent could share the tax liability resulting from such failure in accordance with our relative market capitalizations as of the Distribution Date (determined based on the average trading prices of each company’s stock during the ten trading days beginning on the Distribution Date).
The growth of the internet and network-connected device usage, along with the rapid advancement of online and mobile content delivery, has resulted in download and streaming services becoming mainstream with consumers in various parts of the world. We expect the shift away from optical disc-based media to streaming and downloadable content consumption to continue.
Prior to the advent of streaming and downloadable content services, video and audio content was purchased and consumed primarily via optical disc-based media. The growth of the internet and network-connected device usage, along with the rapid advancement of online and mobile content delivery, has resulted in download and streaming services becoming mainstream with consumers in various parts of the world.
Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products subject to those licenses.
We have not filed trademark registrations in all jurisdictions where our brands and logos may be used. Some software we provide may be subject to “open source” licenses, which may restrict how we use or distribute our software or require that we release the source code of certain products subject to those licenses.
If we fail to effectively manage the integration of our software and services with our hardware partners’ devices, we or our manufacturing partners could suffer from product recalls, poorly performing products and higher than anticipated warranty costs. We have contracted for the design, manufacture and distribution of certain TiVo-branded DVRs and non-DVRs with a third-party partner.
Further, if we fail to effectively manage the integration of our software and services with our hardware partners’ devices, we or our manufacturing partners could suffer from product recalls, poorly performing products and higher than anticipated warranty costs.
If we fail to continue to further penetrate the streaming and downloadable content delivery market, our business could suffer. The services that provide content from the internet are not generally governed by international or national standards and are thus free to choose any media format(s) to deliver their products and services.
The services that provide content from the internet are not generally governed by international or national standards and are thus free to choose any media format(s) to deliver their products and services.
As a result, we cannot ensure that a sufficient amount of content will be released in a DTS audio format or that manufacturers will continue offering DTS decoders in the consumer electronics products that they sell. Demand for our Connected Car technologies, including HD Radio, may be insufficient to sustain projected growth.
As a result, we cannot ensure that a sufficient amount of content will be released in a DTS audio format or that manufacturers will continue offering DTS decoders in the consumer electronics products that they sell.
The FCC could promulgate new regulations or interpret existing regulations in a manner that would cause us to incur significant compliance costs or force us to alter or eliminate certain features or functionality of our products or services, which may adversely affect our business.
For example, the FCC in the United States has licensing and other requirements, in addition to extensive regulation by local and state authorities. 37 The FCC or regulators in other countries could promulgate new regulations or interpret existing regulations in a manner that would cause us to incur significant compliance costs or force us to alter or eliminate certain features or functionality of our products or services, which may adversely affect our business.
If our Pay-TV customers are unable to maintain their subscriber bases, the royalties they owe us will decline. Our licensees may delay, refuse to or be unable to make payments to us due to financial difficulties or otherwise, or shift their licensed products to other companies to lower their royalties to us.
Our licensees may delay, refuse to or be unable to make payments to us due to financial difficulties or otherwise, or shift their licensed products to other companies to lower their royalties to us.

… 275 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeWe expect to continue to be involved in similar legal proceedings in the future. Although considerable uncertainty exists, our management does not anticipate that the ultimate disposition of these matters will have a material adverse effect on our results of operations, consolidated financial position or liquidity.
Biggest changeWe expect to continue to be involved in similar legal proceedings in the 47 future. Although considerable uncertainty exists, our management does not anticipate that the ultimate disposition of these matters will have a material adverse effect on our results of operations, consolidated financial position or liquidity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−0 removed1 unchanged
Biggest changeIn addition, a substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions. We have never declared or paid cash dividends on our common stock since the Separation.
Biggest changeAs of February 16, 2024, there were 44,271,263 outstanding shares of common stock held by 269 stockholders of record. In addition, a substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 for the period beginning October 3, 2022, the date of the Separation, through December 31, 2022.
The following graph shows a comparison of total stockholder return for holders of our common stock, the Nasdaq Composite Index, the Russell 2000 Index and the S&P 500 for the period beginning October 3, 2022, the date of the Separation, through December 31, 2023.
Any determination to pay dividends on our common stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors considers relevant.
Any determination to pay dividends on our common stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, contractual obligations, general business conditions and other factors that our Board of Directors considers relevant.
Stock Repurchases As of December 31, 2022, we had no authorized share repurchase programs. 49 Stock Performance Graph The common stock of Xperi Inc. commenced trading on October 3, 2022 following the completion of the Separation.
Stock Repurchases As of December 31, 2023, we had no authorized share repurchase programs and there were no share repurchases during the year ended December 31, 2023. 49 Stock Performance Graph The common stock of Xperi Inc. commenced trading on October 3, 2022 following the completion of the Separation.
This graphic comparison is presented pursuant to the rules of the SEC. 10/3/2022 10/31/2022 11/30/2022 12/30/2022 Xperi Inc. $ 100.00 $ 93.32 $ 71.54 $ 57.52 Nasdaq Composite $ 100.00 $ 101.60 $ 106.03 $ 96.77 Russell 2000 Index $ 100.00 $ 108.07 $ 110.40 $ 103.07 S&P 500 $ 100.00 $ 105.26 $ 110.92 $ 104.38 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
This graphic comparison is presented pursuant to the rules of the SEC. 10/3/2022 12/30/2022 3/31/2023 6/30/2023 9/29/2023 12/29/2023 Xperi Inc. $ 100.00 $ 57.52 $ 73.01 $ 87.84 $ 65.87 $ 73.61 Nasdaq Composite $ 100.00 $ 96.77 $ 113.00 $ 127.48 $ 122.23 $ 138.80 Russell 2000 Index $ 100.00 $ 103.07 $ 105.48 $ 110.53 $ 104.46 $ 118.62 S&P 500 $ 100.00 $ 104.38 $ 111.71 $ 120.99 $ 116.57 $ 129.67 This section is not “soliciting material,” is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Item 5. Market for Registrant's Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities On October 3, 2022, our common stock began regular-way trading on the New York Stock Exchange (“NYSE”) under the symbol “XPER.” As of February 17, 2023, there were 42,084,591 outstanding shares of common stock held by 287 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities Our common stock has been trading on the New York Stock Exchange (“NYSE”) under the symbol “XPER” since October 3, 2022. Prior to that date, there was no established public market for our stock.
Added
We have never declared or paid cash dividends on our common stock since the Separation.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

74 edited+20 added−29 removed28 unchanged
Biggest changeThe following table presents our historical operating results for the periods indicated as a percentage of revenue: Years ended December 31, 2022 2021 2020 Revenue 100 % 100 % 100 % Operating expenses: Cost of revenue, excluding depreciation and amortization of intangible assets 24 26 21 Research and development 43 40 43 Selling, general and administrative 43 41 46 Depreciation expense 4 4 5 Amortization expense 12 22 26 Impairment of long-lived assets 2 — — Goodwill impairment 121 — — Total operating expenses 249 133 141 Operating loss (149 ) (33 ) (41 ) Other income, net — — — Loss before taxes (149 ) (33 ) (41 ) Provision for (benefit from) income taxes 3 4 (3 ) Net loss (152 )% (37 )% (38 )% The following table sets forth our revenue by year (in thousands, except for percentages): Years Ended December 31, 2022 vs. 2021 2022 2021 2020 Increase % Change Revenue $ 502,260 $ 486,483 $ 376,101 $ 15,777 3 % The $15.8 million or 3% increase in revenue for the year ended December 31, 2022, compared to the prior year, was primarily attributable to an increase in Consumer Electronics revenue driven by settling a contract dispute and entering into a new licensing agreement with a large mobile imaging customer, as well as an increase in Media Platform revenue from higher monetization and from the mid-year acquisition of Vewd.
Biggest changeResults of Operations The following table presents our historical operating results for the periods indicated as a percentage of revenue: Year Ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Operating expenses: Cost of revenue, excluding depreciation and amortization of intangible assets 23 24 26 Research and development 43 43 40 Selling, general and administrative 45 43 41 Depreciation expense 3 4 4 Amortization expense 11 12 22 Goodwill impairment — 121 — Impairment of long-lived assets — 2 — Total operating expenses 125 249 133 Operating loss (25 ) (149 ) (33 ) Other (expense) income, net — — — Loss before taxes (25 ) (149 ) (33 ) Provision for income taxes 2 3 4 Net loss (27 )% (152 )% (37 )% 52 Comparison of Fiscal Years Ended December 31, 2023 and 2022 Revenue We derive the majority of our revenue from licensing our technology and solutions to customers.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to promote understanding of the results of operations and financial condition and should be read in conjunction with our consolidated financial statements and notes thereto. This discussion may contain forward-looking statements that reflect the plans, estimates and beliefs of Xperi.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis is intended to promote understanding of the results of operations and financial condition and should be read in conjunction with our consolidated financial statements and notes thereto. This discussion may contain forward-looking statements that reflect the plans, estimates and beliefs of Xperi.
Goodwill Impairment During the three months ended December 31, 2022, sufficient indicators of potential impairment were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment test should be performed as of December 31, 2022.
During the three months ended December 31, 2022, sufficient indicators of potential impairment were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment test should be performed as of December 31, 2022.
During the three months ended September 30, 2022, indicators of potential impairment for the Product reporting unit of our Former Parent were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment assessment should be performed as of September 30, 2022.
Goodwill Impairment During the three months ended September 30, 2022, indicators of potential impairment for the Product reporting unit of our Former Parent were identified such that management concluded it was more-likely-than-not that goodwill was impaired and a quantitative interim goodwill impairment assessment should be performed as of September 30, 2022.
Our income tax expense for the years ended December 31, 2022, 2021 and 2020 was calculated on a separate return basis as if we would file our tax return for the full twelve months in each year. However, activities for periods prior to the Separation Date are generally reported on U.S. income tax returns filed by our Former Parent.
Our income tax expense for the years ended December 31, 2022 and 2021 was calculated on a separate return basis as if we would file our tax return for the full twelve months in each year. However, activities for periods prior to the Separation Date are generally reported on U.S. income tax returns filed by our Former Parent.
We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets, business combinations, recognition and measurement of deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and others.
We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets, business combinations, recognition and measurement of deferred income tax 58 assets and liabilities, the assessment of unrecognized tax benefits, and others.
Subsequent to this Transfer and through December 31, 2022, our financial statements and accompanying notes are prepared on a consolidated basis and include the financial statements of Xperi and its subsidiaries in which Xperi has a controlling financial interest. All intercompany balances and transactions are eliminated in consolidation.
(“Xperi”). Subsequent to this Transfer and through December 31, 2022, our financial statements and accompanying notes are prepared on a consolidated basis and include the financial statements of Xperi and its subsidiaries in which Xperi has a controlling financial interest. All intercompany balances and transactions are eliminated in consolidation.
The income tax expense of $13.6 million was primarily related to foreign 55 withholding taxes of $10.2 million, state income taxes of $1.6 million, and foreign income tax expense of $7.2 million, partially offset by a tax benefit due to an impairment of goodwill of $5.0 million.
The income tax expense of $13.6 million was primarily related to foreign withholding taxes of $10.2 million, state income taxes of $1.6 million, and foreign income tax expense of $7.2 million, partially offset by a tax benefit due to an impairment of goodwill of $5.0 million.
Cash Flows from Financing Activities Net cash provided by financing activities was $135.8 million for the year ended December 31, 2022 consisting primarily of $52.8 million of net transfers from the Former Parent and $83.2 million of net proceeds from capital contributions by the Former Parent.
Net cash provided by financing activities was $135.8 million for the year ended December 31, 2022 consisting primarily of $52.8 million of net transfers from the Former Parent and $83.2 million of net proceeds from capital contributions by the Former Parent.
Generally, revenue is recognized upon transfer of control of promised products, services or technologies to customers in an amount that reflects the consideration that we expect to receive in exchange for those products, services and licensing of the technologies.
Generally, revenue is recognized upon transfer of control of promised products, services, or licensing of our technologies to customers in an amount that reflects the consideration that we expect to receive in exchange for those products, services and licensing of the technologies.
Cash Flows Cash Flows From Operating Activities Net cash used by operations was $28.4 million for the year ended December 31, 2022, primarily due to our net loss of $761.2 million and $6.0 million in changes in operating assets and liabilities being adjusted for non-cash items of depreciation of $20.5 million, amortization of intangible assets of $62.2 million, stock-based compensation of $45.3 million, goodwill impairment of $604.6 million and impairment of long-lived assets of $7.7 million.
Net cash used by operations was $28.4 million for the year ended December 31, 2022, primarily due to our net loss of $761.2 million and $6.0 million in changes in operating assets and liabilities being adjusted for non-cash items of depreciation of $20.5 million, amortization of intangible assets of $62.2 million, stock-based compensation of $45.3 million, goodwill impairment of $604.6 million and impairment of long-lived assets of $7.7 million.
We evaluate the carrying value of indefinite-lived intangible assets on an annual basis, and an impairment charge would be recognized to the extent that the carrying amount of such assets exceeds their estimated fair value. Accounting for income taxes We must make certain estimates and judgments in determining income tax expense for financial statement purposes.
For identified indefinite-lived intangible assets resulting from acquisitions, we evaluate their carrying value on an annual basis, and an impairment charge would be recognized to the extent that the carrying amount of such assets exceeds their estimated fair value. Accounting for income taxes We must make certain estimates and judgments in determining income tax expense for financial statement purposes.
General and administrative expenses consist primarily of compensation and related costs for general management, information technology, finance personnel, legal fees and expenses, facilities costs, stock-based compensation expense, and professional services. Our general and administrative expenses, other than facilities-related expenses, are not allocated to other expense line items.
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 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.
We operate in one reportable business segment and currently group our business into four categories based on the markets served: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 2,100 employees and more than 35 years of operating experience.
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 2,100 employees and more than 35 years of operating experience.
We determined that we may not be able to fully recover the carrying amount of the leased building due to a change in the manner in which the building is being used, a significant decrease in the expected market price of the leased asset, and expected delays in subleasing the space based on the current real estate leasing market.
We determined that we may not be able to fully recover the carrying amount of the leased building due to a change in the manner in which the building is being used, an expected decrease in the market price of the leased asset, along with expected delays in subleasing the space based on the current real estate leasing market.
This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Provision for (benefit from) Income Taxes For the year ended December 31, 2022, we recorded an income tax expense of $13.6 million on a pretax loss of $747.6 million, which resulted in an effective tax rate of (1.8)%.
For the year ended December 31, 2022, we recorded an income tax expense of $13.6 million on a pretax loss of $747.6 million, which resulted in an effective tax rate of (1.8)%.
The decrease was due to certain intangible assets becoming fully amortized in the fourth quarter of 2021, partially offset by new amortization expense as a result of the Vewd Acquisition in July 2022. As a result of previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years.
The decrease was primarily due to certain intangible assets becoming fully amortized in 2023, which was partially offset by new amortization expense as a result of the Vewd Acquisition in July 2022. As a result of previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years.
Estimating customers’ quarterly royalties prior to receiving the royalty reports requires us 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 we report on a quarterly basis.
Estimating customers’ quarterly royalties and license fees prior to receiving the customer reports requires us to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers or the number of subscribers, which could have a material impact on the amount of revenue we report on a quarterly basis.
See “Note 2 - Summary of Significant Accounting Policies ” and “Note 4 - Revenue ” of the Notes to Consolidated Financial Statements for a full description of our accounting policies. Revenue recognition We derive the majority of our revenue from the licensing of our technologies to customers.
See Note 2— Summary of Significant Accounting Policies and Note 3— Revenue of the Notes to Consolidated Financial Statements for a full description of our accounting policies. Revenue recognition We derive the majority of our revenue from the licensing of our technologies to customers.
At December 31, 2022, our 2018 through 2022 tax years are generally open and subject to potential examination in one or more jurisdictions.
At December 31, 2023, our 2019 through 2023 tax years are generally open and subject to potential examination in one or more jurisdictions.
As a result of the fair value analysis, a goodwill impairment charge of $250.6 million was recognized during the three months ended December 31, 2022. As a result of this impairment charge, our goodwill balance was reduced to $0 as of December 31, 2022.
As a result of the fair value analysis, a goodwill impairment charge of $250.6 million was recognized during the three months ended December 31, 2022. As a result of this impairment charge, our goodwill balance was reduced to $0 as of December 31, 2022. We did not recognize a goodwill impairment charge for the year ended December 31, 2023.
The words “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made.
The words “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “will,” “intends,” “potentially,” “projects,” “targets,” or other words of similar meaning and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made.
Each Xperi Holding stockholder of record received four shares of Xperi common stock, $0.001 par value, for every ten shares of Xperi Holding common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date. Cash was paid in lieu of any fractional shares of Xperi common stock.
Each Xperi Holding stockholder of record received four shares of Xperi common stock, $0.001 par value, for every ten shares of Xperi Holding common stock, $0.001 par value, held by such stockholder as of the close of business on the Record Date.
Income Tax Payable As of December 31, 2022, we had accrued $7.6 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which included immaterial accrued interest and penalties.
Income Tax Payable As of December 31, 2023, we had accrued $9.6 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which included $0.4 million of accrued interest and penalties.
Impairment of Long-Lived Assets As a result of consolidating our global real estate footprint and a decision to sublease a recently vacated office building, we recorded non-cash impairment charges of $7.7 million to reduce the carrying amount of certain operating lease right-of-use (“ROU”) assets and property and equipment, including leasehold improvements, during the year ended December 31, 2022.
Impairment of Long-Lived Assets As a result of optimizing our global real estate footprint and decisions to vacate and sublease an office building following the Spin-Off, we recorded non-cash impairment charges of $7.7 million to reduce the carrying amount of certain operating lease 54 right-of-use (“ROU”) assets and property and equipment, including leasehold improvements, during the year ended December 31, 2022.
On October 1, 2022, Xperi Holding completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all of the outstanding common stock of its product-related business (“Xperi”, “we”, “our”, or the “Company”) to the stockholders of record of Xperi Holding as of the close of business on September 21, 2022, the record date (the “Record Date”) for the Distribution.
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 of the outstanding common stock of its product-related business (“Xperi,” “we,” “our,” or the “Company”) to the stockholders of record of Xperi Holding Corporation as of the close of business on September 21, 2022, the record date (the “Record Date”) for the Distribution.
For our revenue recognition policy including descriptions of revenue-generating activities, refer to “Note 4 – Revenue ” of the Notes to Consolidated Financial Statements.
For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 3— Revenue of the Notes to Consolidated Financial Statements.
For a detailed discussion of the basis of presentation, refer to “Note 1 – The Company and Basis of Presentation ” of Notes to the Consolidated Financial Statements. Key Metrics In evaluating our financial condition and operating performance, we focus on revenue and cash flow from operations.
For a detailed discussion of the basis of presentation, refer to Note 2— Summary of Significant Accounting Policies of Notes to the Consolidated Financial Statements. Key Metrics In evaluating our financial condition and operating performance, we focus on revenue and cash flow from operations.
This decrease was primarily attributable to lower hardware product-related costs due to a decline in hardware product sales in 2022. 53 Research and Development Research, development and other related costs (“R&D expense”) are comprised 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 costs related to patent applications and examinations, reverse engineering, materials, supplies, and an allocation of facilities costs.
Research and Development Research, development and other related costs (“R&D expense”) are comprised 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 costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs.
Cost of revenue, excluding depreciation and amortization of intangible assets, for the year ended December 31, 2022 was $122.9 million, as compared to $125.6 million for the year ended December 31, 2021, a decrease of $2.7 million.
Cost of revenue, excluding depreciation and amortization of intangible assets, for the year ended December 31, 2023 was $118.6 million, as compared to $122.9 million for the year ended December 31, 2022, a decrease of $4.3 million, or 4%.
As a result of the fair value analysis, we recognized a goodwill impairment charge of $354.0 million during the three months ended September 30, 2022. We did not recognize a goodwill impairment charge for the year ended December 31, 2021.
As a result of the fair value analysis, we recognized a goodwill impairment charge of $354.0 million during the three months ended September 30, 2022.
At the time of the Spin-Off, our Former Parent capitalized us such that we carried an amount of cash and cash equivalents of over $180.0 million.
We no longer participate in cash management and funding arrangements facilitated by the Former Parent. At the time of the Spin-Off, our Former Parent capitalized us such that we carried an amount of cash and cash equivalents of over $180.0 million.
Recent Accounting Pronouncements See “Note 3 – Recent Accounting Pronouncements ” of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption. 60
Recent Accounting Pronouncements See Note 2— Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption. 60
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.
This may result in an adjustment to revenue when actual sales, production or usage are subsequently reported by the customer, generally in the month or quarter following sales, production or usage.
All research, development and other related costs are expensed as incurred. R&D expense for the year ended December 31, 2022 was $216.4 million as compared to $194.9 million for the year ended December 31, 2021, an increase of $21.5 million.
All research, development and other related costs are expensed as incurred. 53 R&D expense for the year ended December 31, 2023 was $222.8 million as compared to $216.4 million for the year ended December 31, 2022, an increase of $6.4 million, or 3%.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Registration Statement on Form 10, filed with the SEC on September 14, 2022 (the “Form 10”), which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.xperi.com .
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 6, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.xperi.com.
Business combinations The valuation of assets acquired and liabilities assumed in a business combination under ASC 805, Business Combinations (“ASC 805”) requires management to make significant estimates and assumptions.
Business combinations The valuation of assets acquired and liabilities assumed in an acquisition under Accounting Standard Codification Topic 805, Business Combinations (“ASC 805”) requires management to make significant estimates and assumptions.
The increase in stock-based compensation for the year ended December 31, 2022, compared to the prior year, was primarily a result of the vesting of restricted stock awards made to an increased number of employees resulting from the Mergers, the MobiTV Acquisition, the Vewd Acquisition and certain insourcing activity, and secondarily due to incremental compensation cost recognized related to the conversion of employee equity awards during the Spin-Off.
The increase in SBC expense for the year ended December 31, 2023, when compared to the prior year, was primarily a result of granting restricted stock units to an increased number of employees resulting from the Vewd Acquisition and certain insourcing activity, and due to incremental compensation cost recognized from the conversion of employee equity awards in connection with the Spin-Off.
Cash Flows from Investing Activities Net cash used in investing activities was $64.8 million for the year ended December 31, 2022, primarily related to net cash paid of $50.5 million for the Vewd Acquisition, capital expenditures of $14.2 million and purchases of intangible assets of $0.2 million. 57 Net cash used in investing activities was $21.5 million for the year ended December 31, 2021, primarily related to net cash paid of $12.4 million for the MobiTV Acquisition, capital expenditures of $8.9 million and purchases of intangible assets of $0.2 million.
Net cash used in investing activities was $64.8 million for the year ended December 31, 2022, primarily related to net cash paid of $50.5 million for the Vewd Acquisition, and capital expenditures of $14.2 million.
We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it in a way that is more intelligent, immersive and personal.
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.
For the year ended December 31, 2022 as compared to the year ended December 31, 2021: • Revenue increased by $15.8 million, representing a 3% increase for the year ended December 31, 2022, compared to the prior year.
For the year ended December 31, 2023 as compared to the year ended December 31, 2022: • Revenue increased by $19.1 million, representing a 4% increase for the year ended December 31, 2023, compared to the prior year.
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 this Form 10-K. 58 Critical Accounting Estimates Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements.
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 this Form 10-K.
Powering smart devices, connected cars, entertainment experiences and more, we have created a unified ecosystem that reaches highly engaged consumers, uncovering significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and media platforms worldwide, driving increased value for partners, customers and consumers.
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 must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely on a more-likely-than-not basis, we must increase our provision for income taxes by recording a valuation allowance against our deferred tax assets.
If recovery is not likely on a more-likely-than-not basis, we must increase our provision for income taxes by recording a valuation allowance against our deferred tax assets. Should there be a change in our ability to recover our deferred tax assets, our provision for income taxes would fluctuate in the period of the change.
The primary judgments include estimating licensees’ quarterly royalties prior to receiving the royalty reports, estimating variable consideration, identifying the performance obligations in the contract, determining stand-alone selling price and the transaction price, and allocating consideration in an arrangement with multiple performance obligations. We generally recognize royalty revenue from per-unit or per-subscriber licenses based on units shipped or manufactured.
The primary judgments include estimating licensees’ quarterly royalties prior to receiving the royalty reports, estimating variable consideration, identifying the performance obligations in the contract, determining stand-alone selling price and the transaction price, and allocating consideration in an arrangement with multiple performance obligations.
At December 31, 2022, $50.0 million was outstanding under the Promissory Note with an annual interest rate of 6.0%. Interest is payable quarterly. Under the Promissory Note agreement, we are obligated to make a balloon principal payment of $50.0 million in 2025.
At December 31, 2023, $50.0 million was outstanding under the Promissory Note with an annual interest rate of 6.0%. Interest is payable quarterly. Under the Promissory Note agreement, we are obligated to make a balloon principal payment of $50.0 million in July 2025. Following the Separation from our Former Parent, our capital structure and sources of liquidity changed significantly.
Depreciation Expense Depreciation expense was $20.5 million for the year ended December 31, 2022, as compared to $22.6 million for the year ended December 31, 2021, a decrease of $2.1 million. The decrease was primarily due to certain fixed assets becoming fully depreciated during 2022.
Depreciation Expense Depreciation expense was $16.6 million for the year ended December 31, 2023, as compared to $20.5 million for the year ended December 31, 2022, a decrease of $3.9 million, or 19%. The decrease was primarily due to certain fixed assets being fully depreciated during the fourth quarter of 2022 as well as during 2023.
For the years ended December 31, 2022, 2021 and 2020, we recognized insignificant interest and penalties related to unrecognized tax benefits. See “Note 15 - Income Taxes ” of the Notes to Consolidated Financial Statements for additional detail.
For the year ended December 31, 2023, we recognized interest and penalties of $0.3 million related to unrecognized tax benefits, whereas interest and penalties were immaterial for the years ended December 31, 2022 and 2021. See Note 14— Income Taxes of the Notes to Consolidated Financial Statements for additional detail.
Our Former Parent distributed 42,023,632 shares of Xperi common stock in the Distribution, which was effective on October 1, 2022. 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 (“NYSE”).
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 (“NYSE”).
Amortization Expense Amortization expense for the year ended December 31, 2022 was $62.2 million, as compared to $105.3 million for the year ended December 31, 2021, a decrease of $43.1 million.
Amortization Expense Amortization expense for the year ended December 31, 2023 was $57.8 million, as compared to $62.2 million for the year ended December 31, 2022, a decrease of $4.4 million, or 7%.
We believe that a significant level of R&D expense will be required for us to remain competitive in the future. Selling, General and Administrative Selling expenses consist primarily of compensation and related costs for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, trade show expenses, and stock-based compensation expense.
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.
Stock-based Compensation Expense The following table sets forth our stock-based compensation (“SBC”) expense for the years ended December 31, 2022, 2021 and 2020 (in thousands): Years Ended December 31, 2022 2021 2020 Cost of revenue, excluding depreciation and amortization of intangible assets $ 2,906 $ 1,972 $ 585 Research and development 21,561 17,914 11,383 Selling, general and administrative 20,836 13,623 7,215 Total stock-based compensation $ 45,303 $ 33,509 $ 19,183 54 Stock-based compensation awards include restricted stock awards and units, employee stock purchase plan (“ESPP”) purchases and employee stock options.
Stock-based Compensation Expense The following table sets forth our stock-based compensation (“SBC”) expense for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 2022 Cost of revenue, excluding depreciation and amortization of intangible assets $ 3,466 $ 2,906 Research and development 25,276 21,561 Selling, general and administrative 40,789 20,836 Total stock-based compensation $ 69,531 $ 45,303 Stock-based compensation include restricted stock units, employee stock options and purchases made under our employee stock purchase plan (“ESPP”).
If the useful life is shorter than originally estimated, we would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life. Identified indefinite-lived intangible assets include TiVo trademarks and trade names resulting from business combinations.
If the useful life is shorter than originally estimated, we would accelerate the rate of amortization and amortize the remaining carrying value over the new shorter useful life.
See “Note 10—Goodwill and Identified Intangible Assets” of the Notes to Consolidated Financial Statements for additional detail.
See Note 8 —Goodwill impairment and Intangible Assets, Net of the Notes to Consolidated Financial Statements for additional detail.
Because of this, income tax expense presented in the Consolidated Statements of Operations for periods prior to the Separation is not necessarily representative of the taxes that may arise in the future when we file our income tax returns independent from the Former Parent's returns.
Because of this, income tax expense presented in the Consolidated Statements of Operations for periods prior to the Separation was not necessarily representative of the taxes that arose when we filed our income tax returns for the year ended December 31, 2022.
Other Income (Expense), Net Other income, net, for the year ended December 31, 2022 was $1.8 million, as compared to other income, net, of $1.6 million for the year ended December 31, 2021.
Other (Expense) Income, Net Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Other (expense) income, net $ (9 ) $ 1,815 $ (1,824 ) (100 )% Other (expense) income, net, for the year ended December 31, 2023 was insignificant, as compared to the $1.8 million for the year ended December 31, 2022.
Purchase Obligations Our purchase obligations primarily consist of noncancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2022, we had purchase obligations of $102.9 million, with $32.7 million payable within 12 months.
Future interest payments associated with the debt total $4.5 million, with $3.0 million payable within 12 months. Purchase Obligations Our purchase obligations primarily consist of noncancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2023, we had purchase obligations of $143.2 million, with $44.2 million payable within 12 months.
Basis of Presentation Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”).
Basis of Presentation Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). 51 During the three months ended September 30, 2022, all of the assets and liabilities of the Xperi Product business had been transferred to a legal entity (the “Transfer”) under the common control of Xperi Inc.
Net cash used by operations was $23.5 million for the year ended December 31, 2021, primarily due to our net loss of $179.1 million, $10.9 million in changes in operating assets and liabilities, and provision for credit losses of $1.0 million, partially offset by a reduction in deferred income taxes of $6.9 million and non-cash items of depreciation of $22.6 million, amortization of intangible assets of $105.3 million, and stock-based compensation expense of $33.5 million.
Cash Flows Cash Flows From Operating Activities Net cash provided by operations was $0.1 million for the year ended December 31, 2023, primarily due to our net loss of $139.7 million and a decrease in deferred income taxes of $8.6 million, offset by non-cash items such as depreciation expense of $16.6 million, amortization of intangible assets of $57.8 million, stock-based compensation expense of $69.5 million, impairment of long-lived assets of $1.7 million, and $2.0 million of changes in operating assets and liabilities.
We plan to supplement this short-term liquidity, if necessary, with access to capital markets.
We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives.
Other income, net, was higher in 2022 principally due to an increase in interest payments from past due royalties received, partially offset by the interest expense on debt incurred in connection with the Vewd acquisition discussed below in Liquidity and Capital Resources.
Other (expense) income, net, was lower in 2023 principally due to higher foreign exchange transaction losses recognized as well as the interest expense on debt incurred in connection with the Vewd Acquisition discussed below in Liquidity and Capital Resources, partially offset by an increase in interest income from significant financing components from revenue contracts executed and gains recognized on derivatives not designated as hedge instruments in 2023.
These estimates and judgments are used in the calculation of tax credits, tax benefits and deductions, and in the calculation of tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.
These estimates and judgments are used in the calculation of tax credits, tax benefits and deductions, and in the calculation of tax assets and liabilities.
Our material cash requirements include the following contractual and other obligations. 56 Leases We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2022, fixed lease payment obligations amounted to $59.9 million, with $19.9 million payable within 12 months.
Leases We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2023, fixed lease payment obligations amounted to $49.9 million, with $16.8 million payable within 12 months. See Note 10— Leases of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities.
Should there be a change in our ability to recover our deferred tax assets, our provision for income taxes would fluctuate in the period of the change. We account for uncertain tax positions in accordance with authoritative guidance related to income taxes. The calculation of our unrecognized tax benefits involves dealing with uncertainties in the application of complex tax regulations.
We account for uncertain tax positions in accordance with authoritative guidance related to income taxes. The calculation of our unrecognized tax benefits involves dealing with uncertainties in the application of complex tax regulations. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures.
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, without premium or penalty. Future interest payments associated with the debt total $7.5 million, with $3.0 million payable within 12 months.
Long-Term Debt As of December 31, 2023, we had outstanding long-term debt in an aggregate principal amount of $50.0 million, which is due 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, without premium or penalty.
Following the Mergers, Xperi Holding 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”).
The estimated impact of the Divestiture on 2024 revenue is approximately $30.0 million. Spin-Off Transaction 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”).
Selling, general and administrative expenses for the year ended December 31, 2022 were $217.4 million, as compared to $199.9 million for the year ended December 31, 2021, an increase of $17.5 million.
Selling, general and administrative expenses for the year ended December 31, 2023 were $233.4 million as compared to $217.4 million for the year ended December 31, 2022, an increase of $16.0 million, or 7%. The increase was primarily due to increases in stock-based compensation expense and cloud computing expense.
Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, payable in cash on a quarterly basis.
Long-term Debt In connection with the Vewd acquisition 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. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, payable in cash on a quarterly basis.
Capital Expenditures Our capital expenditures for property, plant, and equipment consist primarily of purchases of computer hardware and software, information systems and production and test equipment.
Capital Expenditures Our capital expenditures for property, plant, and equipment consist primarily of purchases of computer hardware and software (including capitalized internal use software), information systems, production and test equipment. We expect capital expenditures in 2024 to be approximately $20.0 million. These expenditures are expected to be financed with existing cash and 57 cash equivalents.
For the year ended December 31, 2021, we recorded an income tax expense of $18.8 million on a pretax loss of $160.2 million, which resulted in an effective tax rate of (11.8)%. The income tax expense of $18.8 million was primarily related to foreign withholding taxes of $9.5 million and foreign income tax expense of $7.9 million.
Provision for Income Taxes Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Provision for income taxes $ 10,042 $ 13,589 $ (3,547 ) (26 )% 55 For the year ended December 31, 2023, we recorded an income tax expense of $10.0 million on a pretax loss of $129.6 million, which resulted in an effective tax rate of (7.7)%.
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 years ended December 31, 2022, 2021 and 2020: December 31, (in thousands, except for percentages) 2022 2021 2020 Cash and cash equivalents $ 160,127 $ 120,695 $ 85,624 Current ratio 2.2 2.3 1.8 Years Ended December 31, 2022 2021 2020 Net cash from operating activities $ (28,445 ) $ (23,453 ) $ (23,777 ) Net cash from investing activities $ (64,846 ) $ (21,480 ) $ 26,522 Net cash from financing activities $ 135,751 $ 83,330 $ 34,244 Our primary sources of liquidity and capital resources are our cash on hand including cash provided by the Former Parent prior to the Separation.
Year Ended December 31, 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 62 $ (28,445 ) Net cash used in investing activities $ (12,933 ) $ (64,846 ) Net cash provided by financing activities $ 7,052 $ 135,751 Our primary sources of liquidity and capital resources are our cash on hand including cash provided by the Former Parent prior to the Separation.
Cash and cash equivalents were $160.1 million at December 31, 2022, an increase of $39.4 million from $120.7 million at December 31, 2021.
Cash and cash equivalents were $154.4 million, including $12.3 million classified as held-for-sale in connection with the Divestiture, at December 31, 2023, a decrease of $5.7 million from $160.1 million at December 31, 2022.
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 technology solution offerings and non-recurring engineering (“NRE”) services.
Operating Expenses Year Ended December 31, 2023 2022 $ Change % Change (dollars in thousands) Cost of revenue, excluding depreciation and amortization of intangible assets $ 118,628 $ 122,946 $ (4,318 ) (4 )% Research and development 222,833 216,355 6,478 3 % Selling, general and administrative 233,403 217,402 16,001 7 % Depreciation expense 16,645 20,501 (3,856 ) (19 )% Amortization expense 57,752 62,209 (4,457 ) (7 )% Goodwill impairment — 604,555 (604,555 ) (100 )% Impairment of long-lived assets 1,710 7,724 (6,014 ) (78 )% Total operating expenses $ 650,971 $ 1,251,692 $ (600,721 ) (48 )% 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.
Removed
Business Overview On December 18, 2019, Xperi Corporation (“Pre-Merger Xperi”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with TiVo Corporation (“Pre-Merger TiVo”) to combine in an all-stock merger of equals transaction (the “Mergers”).
Added
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, which was completed in January 2024, is expected to further streamline our business and focus our investments on entertainment markets.
Removed
Immediately following the consummation of the Mergers on June 1, 2020 (the “Merger Date”), Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”), a Delaware corporation founded in December 2019 under the name “XRAY-TWOLF HoldCo Corporation,” became the parent company of both Pre-Merger Xperi and Pre-Merger TiVo.
Added
The increase was primarily attributable to an increase of $10.7 million in Connected Car revenue as the result of growth from the DTS AutoSense and DTS AutoStage solutions and HD Radio, an increase of $9.2 million in Media Platform revenue driven principally by contribution from Vewd, which was acquired in July 2022, as well as an increase of $4.0 million in Consumer Electronics revenue due largely to growth in royalty and minimum guarantee contracts revenue in Home and Audio.
Removed
In connection with the Separation and the Distribution, our Former Parent was renamed and continues as Adeia Inc. and also changed its stock symbol to “ADEA” on the Nasdaq Global Select Market. We are a leading consumer and entertainment technology company.
Added
These increases were partially offset by a decrease of $4.8 million in Pay-TV revenue, driven by declines in core guide products and consumer hardware and subscription revenue which were partially offset by increases in IPTV solutions. • Net cash from operating activities increased by $28.5 million benefiting primarily from higher cash collections, strong working capital management and a decrease in Separation-related transaction costs and severance and retention payments in 2023.

… 43 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed7 unchanged
Biggest changeAs of December 31, 2022, we had outstanding foreign currency derivative contracts with a total notional amount of $59.6 million. If overall foreign currency exchange rates appreciated (depreciated) uniformly by 10% against the U.S. dollar, our foreign currency derivative contracts outstanding as of December 31, 2022 would experience an approximately $6.0 million gain (loss). 61
Biggest changeAssuming a hypothetical 10% favorable or adverse movement in foreign currency exchange rates against the U.S. dollar, our outstanding foreign currency derivative contracts would experience a gain of approximately $5.0 million or a loss of approximately $4.0 million. 61
We will be exposed to market risk as it relates to changes in the market value of our investments in addition to the liquidity and credit worthiness of the underlying issuers of our investments. Investments are subject to fluctuations in fair value due to the volatility of the credit markets and prevailing interest rates for such securities.
We will be exposed to market risk as it relates to changes in the market value of our investments in addition to the liquidity and creditworthiness of the underlying issuers of our investments. Investments are subject to fluctuations in fair value due to the volatility of the credit markets and prevailing interest rates for such securities.
For derivative instruments that are designated and qualify as cash flow hedges under ASC No. 815, Derivatives and Hedging (“ASC 815”), the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income or loss and reclassified into earnings in the same financial statement line as the item being hedged, and in the same period or periods during which the hedged transaction affects earnings.
For derivative instruments that are designated and qualify as cash flow hedges under ASC 815, Derivatives and Hedging , the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income or loss and reclassified into earnings in the same financial statement line as the item being hedged, and in the same period or periods during which the hedged transaction affects earnings.
Due to our operations outside the United States, we are subject to the risks of fluctuations in foreign currency exchange rates, particularly related to the euro, Indian rupee and British pound.
Due to our operations outside the United States, we are subject to the risks of fluctuations in foreign currency exchange rates, particularly related to the Indian rupee, Polish zloty, Euro, and British pound.
Our cash and cash equivalents and future investments are subject to risks including: Investment Risk We are not currently exposed to market risk because we hold no investments, however we expect to hold such investments in the future.
Our cash and cash equivalents and future investments are subject to risks including: Investment Risk We are not currently exposed to market risk because we hold no investments, however we may hold such investments in the future.
Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized each period in other income (expense), net. For derivative instruments that are not designated as hedging instruments under ASC 815, gains and losses are recognized each period in other income (expense), net.
Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized each period in other income (expense), net. For derivative instruments that are not designated as hedging instruments, gains and losses are recognized each period in other income (expense), net.
These cash balances could be lost or become inaccessible if the underlying financial institutions fail or if they are unable to meet the liquidity requirements of their depositors and they are not supported by the government of the jurisdiction where such cash is held.
These deposits could be lost or become inaccessible if the underlying financial institutions fail or if they are unable to meet the liquidity requirements of their depositors and they are not supported by the government of the jurisdiction where such cash is held. We have not incurred any losses and have had full access to our operating accounts to date.
We have not incurred any losses and have had full access to our operating accounts to date. We believe any failures of domestic and international financial institutions could impact our ability to fund our operations in the short term.
We believe any failures of domestic and international financial institutions could impact our ability to fund our operations in the short term.
Bank Liquidity Risk As of December 31, 2022, we have approximately $160.1 million of cash in operating accounts that are held with both domestic and international financial institutions, the majority held with domestic financial institutions.
Bank Liquidity Risk As of December 31, 2023, we had a total of $154.4 million of deposits, including $12.3 million classified as held-for-sale in connection with the Divestiture, in operating accounts that were held with both domestic and international financial institutions.
Added
As of December 31, 2023, we had outstanding foreign currency derivative contracts with a total notional amount of $46.2 million to buy and sell U.S. dollars in exchange for other currencies.

Other XPER 10-K year-over-year comparisons