Good day, everyone. Thank you for standing by. Welcome to Xperi Fourth Quarter and Full Year 2022 Earnings Conference Call. During today’s presentation, all participants will be in a listen only mode. Following the presentation, the call will be open for questions. I would now like to turn the call over to Mike Iburg, Xperi's Head of Investor Relations. Mike, please go ahead.

Good afternoon. And thank you for joining us as Xperi reports its fourth quarter and full year 2022 financial results. With me on today’s call are Jon Kirchner, Chief Executive Officer; and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation, which can be accessed along with this webcast on our Investor Relations Web site at investor.xperi.com. Before we begin, I would like to provide a few reminders. First, I would like to note that our full year 2022 financial results include results presented on a carve out basis for the periods prior to Xperi separation from Xperi Holding Corporation on October 1, 2022. Xperi Holding Corporation is now known as Adeia. Second, today's discussion contains forward-looking statements that are predictions, projections and other statements about future events, which are based on management's current expectations and beliefs and therefore subject to risks, uncertainties and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discussed today, please refer to the risk factors and MD&A sections of our SEC filings, including our registration statement on Form 10. Please note that the company does not intend to update or alter these forward-looking statements to reflect the events or circumstances arising after this call. Third, we refer to certain non GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the investor relations section of our Web site. Lastly, a replay of this conference call will be available on our Web site shortly after the conclusion of this call. I will now turn the call over to Xperi CEO, Jon Kirchner.

Thank you, Mike. And thank you everyone for joining us on our fourth quarter and full year 2022 earnings call. We're excited to announce strong financial results for our first quarter as an independent company. Revenue in the quarter was $136 million, an increase of 9% from the prior year. For the full year of 2022, total revenue was $502 million, representing a 3% increase from the prior year. Robert will provide a more detailed review of our financial performance in just a moment. We're making material progress in our key growth areas with incremental traction in media platform, IPTV and connected car. Recent announcements, such as Amlogic, integrating our TV OS and related technologies into their Smart TV chipsets and our latest design win for DTS AutoStage, which has been expanded to include TiVo’s video platform in the connected car infotainment experience are prime examples of our increased momentum. As discussed at last fall’s Investor Day, we offer a wide range of solutions designed to create extraordinary entertainment experiences for end users as well as to improve safety, comfort and convenience in the car. Four of our solutions are in markets that are expected to expand rapidly over the next several years, while other solutions are in markets that are more mature and relatively stable over the longer term horizon. We refer to these areas as growth and core respectively. Our strategy is focused on driving revenue growth in four key areas; connected TV advertising, IPTV, in-vehicle infotainment, and in-cabin monitoring. With decades of experience, we have brought to market independent media platforms that are differentiated, unbiased and tailored to provide a personalized consumer experience. We believe these attributes will allow us to capture share and drive revenue growth through a combination of license fees and monetization. The connected…

Thanks, Jon. As Jon mentioned earlier, our fourth quarter earnings represent our first quarter as a fully independent company. And before I walked through the financials, I'd like to mention that all comparisons are against the same quarter in the prior year. Total revenue for the fourth quarter was $136 million, an increase of 9%. This increase was primarily driven by our media platform and consumer electronics businesses. Media platform, although, only 14% of total revenue, was up 57%, driven primarily by monetization and the Vewd acquisition, which occurred last summer. Consumer electronics at 20% of total revenue was up 11%, driven by growth in mobile as we extend our audio and video enhancement technologies into more mobile and PC devices, as well as from incremental license fees from a large mobile customer. Similar to prior quarters, Pay TV represented approximately half of our total revenue and was essentially flat as strong growth in IPTV offset modest declines in our core Pay TV product lines, such as classic guides and consumer DVR hardware. Connected car represented 17% of total revenue and was up 4% due primarily to the progress we've made in AutoStage and AutoSense in addition to automotive head unit production that includes our audio solutions. For the full year of 2022, consumer electronics increased 29% primarily driven by incremental license fees from a large mobile customer and by stronger mobile and PC penetration. Media platform increased 13% due to the Vewd acquisition and growth and monetization. Pay TV declined 5% as declines in the more mature classic guides business were mostly offset by strong growth in IPTV. Connected car declined 5%, primarily due to lower automobile production volumes that impacted HD Radio revenue. Our non-GAAP gross margin for the quarter was $99 million or 73%. Non-GAAP operating expense…

[Operator Instructions] Your first question comes from the line of Nick Zangler with Stephens.

Congrats on all the great news this quarter. I guess I'll start with this connected car win. Just can you frame up, I guess what the TiVo OS looks like on a connected car, does it look similar to the TiVo OS that's on a TV just kind of reformatted to the car or are there significant differences there? And then just as well maybe like just -- does the OEM get to keep the branding like you do on the TV side as well. If you'll share the economics, software economics there, just like you do with the TVs? And then maybe just any early thoughts on the ARPU potential that you see there?

I think it's early stages. So Nick, I think what I'm going to be able to respond to here is to kind of give you bigger picture. So we do expect the business opportunity to create near term license fees, if you will, on a subscribership basis as well as monetization over the longer run. Secondly, I think from a design perspective, obviously, the automaker has a great deal of input on how they would like the video services to appear in the vehicle. So I would say that it will not be identical to what you see in our living room. However, at the core, what's behind it TiVo’s legendary search and recommendation, metadata usage, et cetera, et cetera, and all the things that really create a unique and personalized engagement experience, all those elements are all there. And I think uniquely deployed, given that the car is not the living room despite the fact that I think you're going to see this increasing amount of content consumed in vehicles, particularly as people look at electric vehicles where you have some slightly different use cases as you think about longer stays, while cars are being charged, you have front seat entertainment, all of a sudden becoming more relevant in that context is -- and you also have the longer run kind of semi autonomous or autonomous vehicle driving that will lead to an increase in entertainment consumption. So in short, early days, super excited about the win. I think it shows the power of the platform as we think about what we're doing in not only the living room, but ultimately, in car and on mobile, bringing together that entertainment experience that we've been working towards for a number of years. And I think we'll have a lot more to say about the economics of this long term as we began to do more business in the space where we can put a little more shape around it in a way that does strategically compromise ongoing discussions with a number of folks.

I'm not sure if you're aware, but also on the Roku call the other day, TiVo got a shout out. And so I got to ask, just given all the dynamics that are happening within the TV OEM industry, Roku now is building out their own branded TV, it effectively will compete with their TV OEM partners as it currently stands. Curious what impact maybe this has had on your engagement with potential TV OEM partners and their interest in utilizing TiVo, powered by TiVo option, which seems to be a little bit more TV OEM friendly?

I think, first and foremost, I think that announcement underscores the need for an independent media platform. And I think we've had quite robust engagement prior to that announcement but I would say that announcement further, has created some interest, as people look to engage around independent platforms. So I think our model, our business model, sharing revenue with TV partners long term, as well as our best in class interface and search and rec and whatnot really helps drive where there's interest in what we're doing. I think the other question that was brought up, I think, I know in context or in and around that was a question around scale. And I think the fascinating thing on the scale question is that we already power more than 30 million households today with video based services. So we are uniquely positioned as being a company that already has a very large video service business, doing business all over the world, over decades to be able to serve up an independent media platform. And I think that therein lies part of the key is that we're seen as a credible partner by TV OEMs and I think people are recognizing the independence of the model and a way for us all to win where they get to own the brand, they get to own the customer, we obviously share data and they get to participate in the longtail of the economics.

And then just final one for me on the fundamentals here in the quarter. It was a broad based beat on the expense side, just relative to the expectations that you guys kind of laid out on the last call, and it drove significant adjusted EBITDA upside relative to your prior expectations. So just curious, it looks like it's broad based. But relative to what you guys had alluded to at first, what type of expense mitigation efforts took place in the quarter? And is there any push out into next year potentially or just thoughts on the spread I guess and where we expected expenses to roll in and where they actually did?

I would say, generally speaking, our expense management in the quarter, even as I noted on call, is very good. And we are making good progress toward optimizing the cost structure of the company, and I would expect that to continue into 2023. But I think we made good progress even during the quarter. So I think our numbers supported that, which is actually a positive adjusted EBITDA and we expected expense management and optimization efforts to continue as we go forward.

[Operator Instructions] Your next question comes from Hamed Khorsand with BWS Financial.

Could you just expand on the mobile customer that you generate revenue from? Is this related to the imaging revenue you talked about a couple quarters ago, is this recurring in nature at all? And what's the possibility of adding more mobile customers?

The mobile customer that we referred to on the call is, and as this occurred early during 2022, is a settling a dispute with that customer and also entering into a longer term arrangement with that customer. So it was, let's say, sort of the best of both worlds. And we still see from our products a considerable opportunity for us in mobile through our CE products. So good growth outlook there in the future.

And then about the ad monetization, how are you building inventory available, what kind of response are you getting from advertisers for your platform?

I think people are very interested in the insights we have into the audiences we currently have across our various TV products that are in household, and they're certainly interested in what we're going to be able to bring to table in conjunction with that as it relates to connected TV. And so we already -- one of the other questions we sometimes get is, as you're building towards a monetization model, what about the monetization platform and engine that has to plug into these TVs, even if you got the TVOS embedded. And the answer is, we already have that monetization platform, we have teams working on it today that could work with advertisers directly, and we have infrastructure plugged into your major demand side and supply side platform. So in short, we're ready to continue to scale that as we get more footprint. And CTV has, of course, been our primary focus, because it's the place where we can have the biggest impact on the size and scope of the footprint to really turn on the monetization model overtime.

And the last question I had was related to connected car, you've been talking about a lot more models lately for AutoStage. Where would you stand as far as generating revenue from nearly all of those models that you talked about in your press release, those 100 models, is this '23 event or '24 event?

I think you're going to see, certainly some vehicles come online in '23, more in '24 and even more again in '25. So these deals, commonly involve engineering that has front end time but then they begin to roll usually on some models, and then get expanded into a larger base of models under a particular broader manufacturer umbrella. So it's building and that's one of the things. We've highlighted and we've recognized we are doing fantastically well at winning business. One of the things the world can't fully see yet is how that business will ramp over the next three, five, seven years. But I think one of the steps we took today was to try to provide more insight into that indicating that our committed business pipeline over the next couple of years is in excess of $300 million plus. And I think that begins to give you a feel that we're very confident and have won quite a bit of business in connection with these programs as we move through the next couple of years.

What percentage of those models is displacement of HD Radio and what percentage is brand new as far as you're concerned as opportunity?

Well, we do brands, we do business with all the automotive brands sold in the United States, 40 plus brands. So we're not really displacing with AutoStage those opportunities. Rather it is a layer on top of HD Radio in the United States, or it is a new tranche of business for those manufacturers who are shipping units into other geographies where they're not licensing HD Radio, because HD Radio is not the standard let’s say, in Europe, for example. So in those cases, the AutoStage revenue and the deployment of AutoStage is brand new in those markets. So it's a combination of being an adder in the US and an extender, if you will, of additional business and net new revenue as you look outside the United States, and more broadly in North America.

Your next question is from the line of Matthew Galinko with The Maxim Group.

So on Perceive it sounds like there's still a little volatility on how much and exactly when it starts in 2023? So I'm curious if that's just the result of work that has to happen internally or is that your customers’ own internal work and go to market that leads to that question on when and how much?

I think it's fair to characterize it, Matt, as a little bit of both. I think one of the things that this interest in larger models has done is in some cases it's caused people to assess where they are and in some cases expand their ambitions, which invariably starts the cycle. It also I think -- and I think it also bears noting that the nature of kind of the challenges in the broader CE space and the competition at retail has driven a real concern over cost at the lower end of functionality, and I think it's causing people to reassess part of what they're thinking about building and where it fits, and that leads to some uncertainty around timing and deployment. And there's also been ask of us to enable either more functionality or assist people with different sorts of implementations. So I think we're working through all that, remain highly convicted around the technical differentiation of the platform, and the interest remains very strong. And I think getting that perfect market fit and taking it forward and exactly when and what that's going to look like is going to depend on how few things fall here as we look over the course of the coming quarters.

And I guess just a follow-up to that. With some of the, I think, increased engagement that's talked about, does the pipeline of opportunities sort of fall into the general kind of consumer electronics market that you've previously been brushing up against or is there a different exploration or use case that has the potential to emerge as the first or second or stronger thrust of Perceive’s adoption?

Yes, is the general answer. There -- certainly CE is where a lot of this stuff shows up. But there's -- as we think about industrial, automotive and other use cases, I think having various discussions that I think are going to lead to productive outcomes, I think the big question as always is just timing and road to what that looks like.

[Operator Instructions] There are no further questions at this time. I will turn the call back over to the company for closing remarks.

Thanks, operator, and thanks everyone, for joining today's call. We're excited about our growth prospects and the continuing momentum we see in our business. And I'd like to thank our employees, customers and partners for helping us achieve these strong results. We look forward to reviewing our Q1 results with you in early May and I'm sure we'll see a few of you in between now and then. Thanks so much. Have a good day.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.