Xperi Investor Deck
XPERI Q2 2021INVESTOR DECKAugust 3, 2021
Safe HarborThis document contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21Eof the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Xperi Holding Corporation’s (the “Company”) current expectations, estimates andprojections about the Company’s financial results, forecasts, and business outlook, growth expectations of the Company’s businesses, projected benefits of the Company’s products andservices, the achievement of the Company’s IP revenue baseline and growth opportunities, the projected growth of the end markets applicable to the Company’s intellectual property,products and services, and the Company’s capital allocation framework. In this context, forward-looking statements often address expected future business, financial performance andfinancial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “see,” “will,” “may,” “would,” “might,” “potentially,” “estimate,”“continue,” “expect,” “target,” similar expressions or the negatives of these words or other comparable terminology that convey uncertainty of future events or outcomes. All forward-lookingstatements by their nature address matters that involve risks and uncertainties, many of which are beyond our control, and are not guarantees of future results, such as statements aboutthe anticipated benefits of the transaction. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions thatcould cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, there are or will be important factors that could cause actual results todiffer materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forwardlooking statements. Important risk factors that may cause such a difference include, but are not limited to: challenges in integration of Xperi and TiVo operations after the merger,anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenue, cost savings, expenses, earnings, synergies, economic performance, indebtedness, financialcondition, losses, future prospects, business strategies, and expansion and growth of the Company’s businesses; failure to realize the anticipated benefits of the recent merger with TiVo;the Company’s ability to implement its business strategy; pricing trends, including the Company’s ability to achieve economies of scale; the ability of the Company to retain and hire keypersonnel; potential adverse reactions or changes to business relationships resulting from the merger with TiVo; uncertainty as to the long-term value of the Company’s common stock;legislative, regulatory and economic developments affecting the Company’s business; general economic and market developments and conditions; failure to remediate the materialweaknesses in the Company’s internal control over financial reporting; the evolving legal, regulatory and tax regimes under which the Company operates; unpredictability and severity ofcatastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, and natural disasters; the extent to which the COVID-19 pandemic continues to have anadverse impact on the Company’s business, results of operations, and financial condition will depend on future developments, including measures taken in response to the pandemic,which are highly uncertain and cannot be predicted; the impact of semiconductor supply chain constraints on the Company's customers; and the timing and plans regarding a potentialseparation of the combined business. These risks, as well as other risks associated with the business, are more fully discussed in the Company’s filings with the U.S. Securities andExchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K. While the list of factors presented here is, and the list of factors presented in the Company’s filingswith the SEC are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significantadditional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statementscould include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effecton the Company’s consolidated financial condition, results of operations, liquidity or trading price of common stock. The Company does not assume any obligation to publicly providerevisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwiserequired by securities and other applicable laws.2
One Company, Two BusinessesProductProduct business that delivers end-to-endentertainment in the home and on-the-goIP LicensingLeading IP Licensing business with improvedvisibility, customer diversification and scaleSeamless end-toend entertainment experience fromchoice to consumption11,000 patents and applicationsEnhances automotive in-cabinentertainment experience and safetyMedia portfolio covering fundamentalaspects of the video experienceacross all platformsOffers TV and car manufacturersadditional ways to monetizeconsumptionSemiconductor portfolio coveringfundamental packaging andprocessing technologyA Leader in Consumer & Entertainment Technology and IP Licensing3
Delivering Smarter Technology, ExtraordinaryExperiencesHeadquartered inSan Jose, CA41,800 employeesworldwide11,000 patents andapplicationsListed on NasdaqXPER
Product Markets5Consumer ExperienceConnected CarPay-TV
Products Markets BrandsConsumer ExperienceFind/WatchEnjoyMonetizeUnderstand TiVo Stream TiVo DVR DTS Audio Solutions Imaging IMAX Enhanced Intelligence onthe EdgePay-TVConnected Car6Audience Viewership DataAdvertisingAVOD, vMVPD, SVOD, TiVo Content ID, Search & joy Digital Radio Connected Media Infotainment Monetization Driver Monitoring Occupancy Monitoring Classic Guides TiVo UX IPTV
Products Path to Drive Long-Term GrowthConsumer Experience7Connected Car Drive TiVo Stream footprint Monetization of mediaconsumption & engagement IMAX Enhanced growth Perceive platform growth Deliver fully immersiveConnected Media Platform Deliver Occupancy andDriver Monitoring SolutionsGrowth through enhancedentertainment experiencesGrowth through connectedmedia and in-car safetyPay-TV New UX design wins IPTV conversions Expanded offerings throughMobiTV managed serviceDrive platform conversions tohelp operators offset churn
Consumer Experience and Pay-TV SolutionsTiVo Solutions and Services for Pay-TVFully-integrated cloud-based solution that powers the TiVoService client software that operates on STBs in consumerhomes, as well as IPTV applications that operate on iOS andAndroid platforms, that power tablets, smartphones andmobile streaming devicesPerceivePerceive’s Ergo chip and associatedsoftware delivers datacenter classaccuracy and performance at ultra-lowpower, performing tasks such as facerecognition, audio and video eventdetectionDTS Electronic Image StabilizationEliminates effect of hand jitter and flightnavigation vibration (drones, activity cameras)TiVo StreamA consumer streaming platform thatdelivers a differentiated experience withuniversal discovery andpersonalized recommendations, seamlessintegration of linear, live and streamingprogramming for Smart TVs and streamersincluding the Stream 4K deviceIMAX EnhancedDTS:X Ultra DTS Clear VoiceDesigned for gaming and XR experiencesAdvanced audio input processingtechnology for live game playDTS-HD Master AudioDTS Headphone:X Advanced surround sounddecoderDTSDelivers the IMAX cinema experience inthe home coupled with DTS:X audiotechnologyDTS:X Flagship object- based audio decoderPlay-Fi A smart audio platform for wirelessstreaming of music8Pay-TVConsumer ExperienceIncludes integrated surround soundtechnology and DTS decoder
Consumer Experience Find, Watch, EnjoyDisruptive Platform for MonetizationTransform home entertainment discovery and presentationthrough integrated, intelligent user experience, audio, imaging,and wireless solutions. Expanded channel, and larger TAMs withopportunities for ad monetizationMonetize TiVo Streammedia consumption &engagement for TV OEMsand Content Providers100M TVsExisting OEMRelationships with ICsand all top 10 TV brandsIntegrated solutions forTV OEMs930M Households
TiVo Stream Roadmap to Revenue GrowthLaunched 20202023-2024 FootprintConversionEngagementFootprint EngagementMonetizationPhase 1TiVo Stream 4K10Phase 2TiVo Stream as aSmart TV OS platform
Pay-TV Platform for Service ProvidersSupport the long tail of Pay-TV and reduce churn by developing next-gen UX and IPTV solutions thathelp attract, retain and engage subscribersIPTV SolutionsPersonalized Content Discovery &Entertainment MetadataData & AdvertisingDelivering joy with easy access to live TV,video on demand and streaming in oneamazing experienceLess searching, more watching and deeperengagement through personalization, voicecapabilities and imageryNew revenue streams through advertising,and optimization with audience analyticsContent & TiVo 11
Connected Car SolutionsDTS AutoSenseIn-cabin monitoring solutions that useadvanced computer vision andmachine learning to enable vehiclesto sense the presence of drivers,occupants and objects in the carDTS AudioAudio solutions that deliverenhanced audio in the car12DTS AutoStageNext-gen infotainment platformcomprised of the only global hybridradio solution delivering premiumcontent (lyrics, events, related streams,podcasts), combined with musicmetadata, personalized contentdiscovery and experienceHD RadioHD Radio is the only digital terrestrialbroadcast system approved by theFederal CommunicationsCommission (FCC) for AM/FM radioin the United States
Connected Car Platform for Entertainment & SafetyRevolutionizing the in-cabin automotive experience through highly personalized, connected infotainment(information, safety, entertainment) solutions for the global automotive marketBuilding an ecosystem that delivers an in-car entertainment experience to consumers, and recurring revenueopportunities for Xperi, car manufacturers, and content ownersInfotainmentLeaderLeading global digital radiodatabase and 70M richmusic assets13Partnershipswith all major Tier 1s,Broadcasters and 41auto brands sold inNorth AmericaConnectedMediaDTS AutoStage nowshipping in MercedescarsIn-cabinMonitoringDTS AutoSense shippingin select BMW cars latesummer
Connected Car Roadmap to Revenue GrowthNear-termMid-termExpand DTS AutoStage toinclude metadataAdd personalizationcapabilities and advertising inconnected audio platform,expand globallyContinue expansion of HD Radio1 Phasest2ndPhaseConsumers get instant access in thedash to desired entertainment choice14Long-termAdd video and additionalservices to create connectedmedia platform, expandplatform reach3rdPhaseStreaming music, podcasts and radio
IP Licensing15MediaSemiconductor
Media and Semiconductor IP Licensing PlatformLong History of Developing Relevant IP, Meeting the Evolving Needs ofCustomers and End MarketsMediaDigital Video RecorderEarly Tech2000Chip Scale Package (CSP)Digital CableVideo on DemandMulti-Screen20052010Wafer Level-CSPPackage-on-Package (PoP)Over the Top20152.5D IntegrationSemiconductorGenerated16 8Bin IP Revenue over last 20 years20203D ICCloud/Apps
IP Extend Large and Profitable PlatformIP LicensingLong-term Cash Flow GenerationFocusAreasGrowthOpportunities17Media Increase penetration in OTTvideo platforms License remainingCanadian Pay-TV operatorsSemiconductor Push beyond Moore’s Lawwith 3D integration technologyin Image Sensors, RF, NAND,DRAM and Logic devices
Consistent Baseline of Significant Media RevenueIncreased Media Revenue to 350M1 Annually 350M1 300M Average AnnualRevenueRevenue Ranges from 275M - 318M2201120122013201420152016201720182019202032021 1 Reflectsestimated baseline revenue in 2021 and beyond.any revenue from legacy TiVo TimeWarp licensing program that ended in 2018.3 Excludes any revenue relating to the Comcast license entered into in Q4 2020.2 ExcludesLong-term agreements withthe largest U.S. Pay-TVproviders, Comcastextends into 203118New or renewedagreements with theleading U.S. Pay-TVproviders during this periodAgreements with leadingOTT providers thatunderscore our relevance inthat growing market
IP Platform Growth OpportunitiesLargegrowingaddressablemarket in OTTRemainingunlicensedCanadian Pay-TVoperatorsGrowth Opportunities 350M Annual Revenue Base19Significantindustry trendtoward use ofhybrid bondingfor memory andlogic chipsExpanding PatentLicensing PlatformOTTCanadian Pay-TVSemiconductorBaseline Media Revenuewith largest U.S. Pay-TVproviders licensed
20Financial Summary
Q2 2021 Financial Highlights Revenue of 222.3M GAAP loss per share of (0.01) and non-GAAP earnings per share of 0.61 Cash Flow from Operations of 56.3M Adjusted Free Cash Flow1 of 56.7M Paid down 50.6M in debt and repriced remaining debt to lower futureinterest expense Bought back 10M of common stock1 Adjusted21Free Cash Flow is defined as Operating Cash Flow, less purchases of property and equipment, plus merger and integration, separation, and severance and retention costs.
FY 2021 OutlookCategoryGAAP OutlookRevenue 860M to 900M 860M to 900MCOGS 115M to 125M 115M to 125MOperating Expenses* 760M to 790M 475M to 505MInterest Expense (UPDATED) 39M 39MOther Income 4M 4MCash Tax (net of refunds) 35M to 38M 35M to 38MBasic Shares Outstanding105M105MDiluted Shares Outstanding107M112M 180M to 220M 180M to 220MN/A 185M to 225MOperating Cash FlowAdjusted Free Cash Flow*22*See tables for reconciliation of GAAP to non-GAAP differences.Non-GAAP Outlook
Balanced Capital Allocation FrameworkShare Repurchases: 10M repurchased in Q2 2021 105M repurchased since closing of the mergerDividend: 5.3M paid in Q2 2021 Board of Directors approved 0.05 per share, payable September 14, 2021Debt Paydown: Paid down 50.6M in Q2 2021; 240M paid down since closing of the merger Debt balance of 810M as of June 30, 2021; 611M net debtFocus on returning 50% of FCF through buybacks and dividends23
Appendix24
Non-GAAP Financial MeasuresIn addition to disclosing financial results calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this presentation contains non-GAAPfinancial measures adjusted for either one-time or ongoing non-cash acquired intangibles amortization charges; costs related to actual or planned business combinationsincluding transaction fees, integration costs, severance, facility closures, and retention bonuses; separation costs; all forms of stock-based compensation; loss on debtextinguishment; expensed debt refinancing costs; realized and unrealized gains or losses on marketable equity securities and associated tax effects. Management believesthat the non-GAAP measures used in this release provide investors with important perspectives into the Company’s ongoing business and financial performance andprovide a better understanding of our core operating result reflecting our normal business operations. The non-GAAP financial measures disclosed by the Company shouldnot be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. Our use of non-GAAP financial measures has certain limitationsin that the non-GAAP financial measures we use may not be directly comparable to those reported by other companies. For example, the terms used in this presentation,such as non-GAAP Operating Expenses, do not have a standardized meaning. Other companies may use the same or similarly named measures, but exclude differentitems, which may not provide investors with a comparable view of our performance in relation to other companies. We seek to compensate for the limitation of theCompany’s non-GAAP presentation by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP measures in thefollowing tables. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their mostdirectly comparable U.S. GAAP financial measures. All financial data is presented on a GAAP basis except where the Company indicates its presentation is on a nonGAAP basis.25
GAAP to Non-GAAP Net Income ReconciliationXPERI HOLDING CORPORATIONRECONCILIATIONS FROM GAAP NET LOSS TO NON-GAAP NET INCOME(in thousands, except per share amounts)(unaudited)Net income attributable to the Company:GAAP net loss attributable to the Company26Adjustments to GAAP net loss attributable to the Company:Stock-based compensation expense:Cost of revenueResearch, development and otherSelling, general and administrativeAmortization expenseMerger and integration-related costs:Transaction and other related costs recorded in selling, general and administrativeSeverance and retention recorded in cost of licensing, services and software revenue, excludingdepreciation and amortization of intangible assetsSeverance and retention recorded in research, development and otherSeverance and retention recorded in selling, general and administrativeSeparation costs recorded in selling, general and administrativeGain from lease restructuring recorded in selling, general and administrativeLoss on debt extinguishmentExpensed debt refinancing costsCash taxes paid in excess of tax benefit recordedNon-GAAP net income attributable to the CompanyThree Months EndedJune 30, 2021 (1,118)5294,8099,49752,2421,190 1317719141,900(156)8,0122,590(11,864)69,447
GAAP to Non-GAAP EPS ReconciliationXPERI HOLDING CORPORATIONRECONCILIATIONS FROM GAAP EPS TO NON-GAAP EPS(in thousands, except per share amounts)(unaudited)Diluted earnings per share attributable to the Company:GAAP diluted loss per share attributable to the CompanyAdjustments to GAAP diluted loss per share attributable to the Company:Stock-based compensation expenseAmortization expenseMerger and integration-related costsSeparation costsGain from lease restructuringLoss on debt extinguishmentExpensed debt refinancing costsCash taxes paid in excess of tax benefit recordedNon-GAAP diluted earnings per share attributable to the Company27Weighted average number of shares used in per sharecalculations excluding the effects of stock-based compensation - dilutedThree Months EndedJune 30, 2021 (0.01) 0.130.460.030.02(0.00)0.070.02(0.11)0.61113,722
Adjusted Free Cash Flow ReconciliationXPERI HOLDING CORPORATIONRECONCILIATION FROM OPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in thousands)(unaudited)Three Months EndedJune 30, 2021Cash flow from operationsAdjustments to cash flow from operations:Purchases of property & equipmentMerger and integration costsSeparation-related costsSeverance costsAdjusted free cash flow28 56,250 (3,086)1,1901,90048656,740
GAAP to Non-GAAP OpEx Outlook ReconciliationXPERI HOLDING CORPORATIONRECONCILIATION FOR GUIDANCE ONGAAP TO NON-GAAP OPERATING EXPENSE EXCLUDING COGS(in millions)(unaudited)Twelve Months EndedDecember 31, 2021HighLowGAAP operating expense excluding COGSStock-based compensation -- R&DStock-based compensation -- SG&AMerger, integration and separation-related expense -- R&DMerger, integration and separation-related expense -- SG&AAmortization expenseTotal of non-GAAP adjustmentsNon-GAAP operating expense excluding COGS29 760.0(21.0)(33.0)(4.0)(23.0)(204.0)(285.0)475.0 790.0(21.0)(33.0)(4.0)(23.0)(204.0)(285.0)505.0
Adjusted Free Cash Flow Outlook ReconciliationXPERI HOLDING CORPORATIONRECONCILIATION FOR GUIDANCE ONOPERATING CASH FLOW TO ADJUSTED FREE CASH FLOW(in millions)(unaudited)Twelve Months EndedDecember 31, 2021LowHighCash flow from operationsAdjustments to cash flow from operations:Purchases of property & equipmentMerger, integration and separation costs (1)Adjusted free cash flow(1) Includes severance costs and retention payments.30 180.0 (25.0)30.0185.0 220.0 (25.0)30.0225.0
Fully-integrated cloud- based solution that powers the TiVo . DTS Electronic Image Stabilization Eliminates effect of hand jitter and flight . Flagship object - based audio decoder DTS Clear Voice Advanced audio input processing technology for live game play DTS Headphone:X Includes integrated surroun
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