Good day, everyone. Thank you for standing by. Welcome to the Xperi Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mike Iburg, Xperi Head of Investor Relations. Please go ahead.

Thank you, Jon. Good afternoon and thank you for joining us as Xperi reports its fourth quarter and full year 2023 financial results. With me on today’s call are Jon Kirchner, Chief Executive Officer and Robert Anderson, Chief Financial Officer. In addition to today’s earnings release, there is an earnings presentation, which you can access along with this webcast on our Investor Relations website at investor.xperi.com. Before we begin, I’d like to provide a few reminders. First, I would like to note that unless otherwise stated, all quarterly comparisons are to the same quarter in the prior year. In addition, the first three quarters of 2022 were calculated on a carve-out basis prior to Xperi separation from Xperi Holding Corporation on October 1, 2022. Xperi Holding Corporation is now known as Adeia. As a result, all full year comparisons will be to carve-out financials in the prior year. Second, today’s discussion contains forward-looking statements that are predictions, projections or 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 section of our SEC filings, including our most recent Form 10-K and 10-Q. Please note that the company does not intend to update or alter these forward-looking statements to reflect 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 website. Lastly, a replay of this conference call will be available on our website shortly after the conclusion of this call. With that, I would now like to turn the call over to Xperi’s CEO, Jon Kirchner.

Thank you, Mike and thank you everyone for joining us on our fourth quarter and full year 2023 earnings call. We continue to make progress on both our strategic priorities and profitability during the quarter, while delivering solid financial results for the full year. I’ll let Robert walk you through the details in just a moment, but let me first touch on a few financial highlights. Revenue in the quarter was $137 million, up 1% from the prior year. Adjusted EBITDA was $13.4 million for the quarter or 10% of revenue compared to $3.6 million in the prior year quarter. In addition to improved profitability, we had strong operating cash flow of $21 million in the quarter and ended the year at breakeven for operating cash flow. These results represent a significant milestone for Xperi as we reached new quarterly highs for revenue, adjusted EBITDA and adjusted EBITDA margin. This demonstrates the progress of our business transformation efforts and positions us well for the future. Consistent with the strategy outlined at our separation in the fall of 2022 and despite some economic and geopolitical uncertainties, we are pleased to have delivered on our goal of mid single-digit revenue growth and improved profitability in 2023. Before we talk about our strategy in 2024, let me take a moment to address the recently completed sale of AutoSense and the related imaging business. For years, we’ve been pursuing an opportunity inside the automotive cabin that leverages our deep imaging expertise, specifically driver and occupant monitoring. Our belief was that the market would meaningfully developed by 2025 and present an attractive margin and growth opportunity for Xperi. While we have been very successful at winning new customers, there have been two important changes over the past 18 months that have impacted the long-term opportunity…

Thanks, Jon. I plan to cover two main areas during this call. First, I’ll go through the financial results for the quarter and the year, including commentary on certain items within the results. Second, I’ll provide financial guidance and commentary for fiscal 2024. Beginning with the quarter’s results, let me remind listeners that all comparisons in my comments are to the same quarter in the prior period. Total revenue for the fourth quarter was $137 million, up 1%. Pay TV, our largest revenue category was down less than 1%. During the quarter, we saw modest declines in our core Pay TV business, partially offset by strong growth in our video-over-broadband IPTV solutions. Consumer electronics was up 16% primarily due to growth in mobile solutions and a modest revenue contribution from Perceive. Connected car was up 17% primarily due to revenue recognized in connection with an AutoSense development milestone. Media platform is down 34% due to a decline in revenue relating to a prior year minimum guarantee contract for our smart TV middleware solutions as well as year-over-year declines and monetization from the writers and actor strikes that pushed fall premieres into 2024. For the full year 2023, revenue growth rates were in line with guidance previously provided with media platform growing the fastest, connected car growing low to mid-teens, consumer electronics growing low single-digits, and Pay TV modestly declining. Given the importance of our TiVo video-over-broadband offering as a growth vector for Xperi, we’re providing more detail within the Pay TV business for this annual view. Video-over-broadband grew by 38% over the past year to $60 million. This strong growth occurred in the prior year as well as video-over-broadband business more than doubled between 2021 and 2022 to $44 million. Core Pay TV products, including classic guides, discovery and consumer…

Thanks, Robert. We have covered a lot of material today and I thought it would be helpful if I summarized how I’ll be measuring our success as we move through 2024. At a high level, my expectations for Xperi are to continue the business transformation initiatives we began several years ago to streamline and optimize the organization, which will be measured by the significantly improved profitability and positive cash flow outlined in our ‘24 outlook. On a strategic level, as we drive the business units to deliver the specific key growth milestones outlined earlier in the call, we expect that to set us up for accelerated revenue growth and increased operating leverage in 2025 and beyond. Lastly, as you may know, a shareholder of the company has nominated directors to serve on our board. Given that we are here to discuss the quarter and our outlook for the business, we will not be taking questions on this call regarding the nominations or the annual meeting. With that, I’ll turn the call over to the operator for questions. Operator?

[Operator Instructions] Your first question comes from the line of Jason Kreyer from Craig-Hallum. Please go ahead.

Great. Thank you, guys. Jon, just maybe if you could start out can you level set or maybe reset what the process looks like on the TiVo broadband side like – so you are starting to strike these partnerships with broadband providers? What does that look like for the consumer? Is there an opt-in process or is there an opt-out process and what do you expect the timeline to look like for monetization there?

Well, I think what you are going to see is you are going to see our subscribership grow by virtue of our effort to give our partners a service offering that can attract and retain broadband based customers with video-related offerings. So, this is an extension on what we have been doing more broadly in IPTV and we are pleased to have the recent announcements, but I – and I think we’ll continue to build momentum as there is quite a bit of interest. But I think it broadly fits under the heading of our continued growth within IPTV and that we have a – I think a strong offering for our partners in that space.

And then maybe on the on the TV hardware side of things, you’ve been in market for several months now in Europe. I am just curious can you give us an update on what you are seeing or any specific consumer trends or feedback or how things are progressing there?

I think the feedback has been good. I think that’s part of the reason. I think we are seeing not only additional partners within the program, but I think people aggressively moving to prepare their sets for distribution in the market. So, we know both distribution and production is ramping up. I think this is broadly consistent with what we kind of expected kind of towards the end of last year going into this year. So, I think it’s – I think we’ll have a lot more to say on the topic as we work our way through this year. But as we sit here now, I think the team continues to do an outstanding job at executing and the feedback has been good.

Okay. And then lastly for me just on Perceive, can you give us an update on how we should think about how that fits into operating expenses today? Because I think that’s moved around a little bit from where we were a year ago. And so just with that going under a strategic review, does that change anything from last year and what that contributed to expenses?

Sure. This is Robert. I can take that one. For Perceive, we have several things that have occurred here. One, we have started to recognize revenue under Perceive beginning in the second half of last year and that will continue through this year. We have moderated our spend within Perceive to some extent. And then as we think about fiscal year ‘24 we are – we have announced that we are in a strategic process for Perceive. So I think you can expect we would be looking to conclude that during the middle of this year.

Great. Thank you, guys.

I think another way of putting it, Jason, is not likely to have a material impact on our expense load, think about it in terms of on a net basis in terms of low single digit millions.

Yes, I think that’s correct, low single-digits.

Okay, got it. Thank you.

Your next question comes from the line of Hamed Khorsand from BWS Financial. Please go ahead.

Hi. So first off, I want to ask you about the goal you had set out for your team, Jon, related to TV, why one, is it becoming incrementally harder to secure the TV OS wins?

No. Well, I think there is a universe right of people who don’t make their or don’t develop and license their own proprietary systems. And so within that universe there are certainly larger and smaller players. I think we obviously are engaged with a number of parties. But I think we have our eyes on, I think a subset that I think we had said a couple of years ago as we got to somewhere between 5 and 7, we felt very good that we could achieve our objective of at least 7 million units or more in terms of installed base. And so, I think we are very focused on achieving those core milestones. I think there is clearly upside there and I think we’ll continue to engage with partners. So that number ticks up over time. But as we sit here today, we’ve got some very specific plans to ensure we can deliver on the very milestones we set out previously and getting that last – that next one as part of that.

Okay. And then on the broadband – TiVo for broadband product, how does that change the scale of your TV revenue? Does that improve it at all to offset Pay TV at all anyway this year or this is more of a ‘25 event?

No, I think it all contributes to growth within the broader Video-Over-Broadband/IPTV category. I think the other thing that’s important to recognize is there’s a fair amount of fixed infrastructure associated with running these services. And so as you see more incremental volume come into the network, you can deliver that at ever better incremental margin. And so we’ve spent a lot of time working to build the back-end to be able to be properly scaled where we see that real operating leverage. And I think this program, as we add more subscribers, simply contribute to that, and it will continue to bear out as we move our way towards our broader goals of at least 2.9 million subscribers within the platform.

Okay. And then the last question I had was regarding your TV monetization, why did the strike have an impact in Q4 and not the rest of the year as far as revenue is concerned?

I don’t know that it would be fair to characterize that it didn’t have an impact prior there, too, but certainly, there oftentimes from a seasonality perspective, there are things that tend to happen in Q4 in entertainment that obviously the market was softer as people were shifting certain things into ‘24. And I think the good news is the entertainment market is showing signs of recovery. I think the broader market is still a bit soft as one thinks about the broader scatter market, but we think that too will improve over time.

Okay, thank you.

As we have no further questions in our queue at this time, I will now turn the call over to Jon Kirchner for brief closing remarks.

Thanks, operator, and thanks, everyone, for joining today’s call. We’re excited about our continued strategic momentum and solid operating performance. I’d like to thank our employees, customers, and partners for helping us continue to achieve our objectives. We look forward to reviewing our Q1 results with you in May. Operator, this concludes today’s call.

This concludes today’s conference call. Thank you for your participation and you may now disconnect. Have a nice day, everyone.