Xperi Inc
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
XPER$5.69-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-01.
0000950170-24-023915
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0000950170-25-029159
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 102 current paragraphs.
51 unchanged; 30 reworded; 21 added; 26 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Divestitures
Current report
In August 2024, we entered into an Asset Purchase Agreement with Amazon.com Services LLC to sell substantially all of the assets and certain liabilities of Perceive Corporation (later known as Xperi Pylon Corporation and subsequently dissolved in December 2024), a subsidiary focused on edge inference hardware and software technologies, for a gross amount of $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction (the “Perceive Transaction”) to secure our and Perceive Corporation’s indemnification obligations. The Perceive Transaction was completed on October 2, 2024 and we are now fully focused on entertainment-based solutions to grow our independent media platform and licensing businesses.
Current report
R&D expense for the year ended December 31, 2024 was $191.4 million as compared to $222.8 million for the year ended December 31, 2023, a decrease of $31.4 million, or 14%. The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture, a reduction in expenses related to the Perceive business which was sold via the Perceive Transaction in the fourth quarter of 2024 and decreases in stock-based compensation and bonus expenses. These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction and severance charges incurred in 2024.
Current report
Interest and Other Income, Net
Current report
Interest and other income, net, was lower in 2024 as compared to the prior year principally due to a one-time, non-cash loss of $4.8 million resulting from deconsolidation of the Perceive subsidiary in 2024, partially offset by an increase in accrued and accreted interest income of approximately $3.0 million on the Tobii Note and Deferred Consideration (as defined in Note 7—Acquisitions And Divestitures) from the AutoSense Divestiture.
Current report
Interest Expense—Debt
Current report
Gain on Divestiture
Current report
NM - not meaningful
Current report
As disclosed in Note 7—Acquisitions and Divestitures, we completed the AutoSense Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets. Upon the completion of the AutoSense Divestiture, we recognized a pre-tax gain of $22.9 million in 2024. On October 2, 2024, we closed the Perceive Transaction by selling substantially all the assets and certain liabilities of Perceive. As a result of completing the Perceive Transaction, we recorded a pre-tax gain of $77.9 million in 2024.
Current report
The current ratio is a liquidity ratio that measures our ability to pay short-term obligations or those due within one year. The ratio is calculated by dividing current assets by current liabilities.
Current report
Short-Term Debt
Current report
Stock Repurchase Program
Current report
In April 2024, our Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of our common stock (the “Program”). Under the Program, we may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program. As of December 31, 2024, we have repurchased a total of approximately 2.2 million shares of common stock, since inception of the Program, at an average price of $9.23 per share for a total cost of $20.0 million. As of December 31, 2024, the total remaining amount available for repurchase was $80.0 million. We may continue to execute authorized repurchases from time to time under the Program. There is no guarantee that such repurchases under the Program will enhance the value of our common stock.
Current report
Net cash used in operations was $55.3 million for the year ended December 31, 2024, primarily due to our net loss of $0.9 million being further adjusted by $71.8 million of changes in operating assets and liabilities driven principally by an increase of $46.3 million in unbilled contracts receivable, and $100.8 million of a non-cash gain recognized from the AutoSense Divestiture and the Perceive Transaction. These changes were partially offset by material non-cash items such as stock-based compensation expense of $60.5 million, amortization of intangible assets of $43.4 million, and depreciation expense of $12.6 million.
Current report
Net cash provided by investing activities was $50.8 million for the year ended December 31, 2024, primarily due to net proceeds from divestitures of $67.8 million, partially offset by capital expenditures of $16.8 million, including capitalized internal-use software.
Current report
Net cash used in financing activities was $19.4 million for the year ended December 31, 2024, due to $20.0 million in repurchases of common stock under the Program and $7.2 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $7.9 million in proceeds from the issuance of common stock under the ESPP.
Current report
Short-Term Debt
Current report
On February 21, 2025, we and Xperi SPV LLC (“Xperi SPV”), a wholly-owned special purpose subsidiary, entered into a Receivables Financing Agreement (the “RFA”) with PNC Bank, National Association (“PNC”), and PNC Capital Markets LLC, and a Sale and Contribution Agreement (the “SCA,” and, together with the RFA, the “RF Agreements”) among us, Xperi SPV and certain of our other wholly-owned subsidiaries to establish an accounts receivable securitization program (the “AR Facility”). Interest is payable on a monthly basis. The AR Facility is scheduled to terminate on February 21, 2028, unless terminated earlier pursuant to its terms. For a detailed description of the AR Facility, refer to Note 18—Subsequent Event.
Current report
Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility. The RF Agreements contain various covenants that we believe are usual and customary. The interest payments on the AR Facility debt, exclusive of the debt issuance costs and related amortization, are expected to be approximately $2.5 million in 2025 and may vary with changes in interest rates.
Current report
Liquidity
Current report
We believe our current cash and cash equivalents will be sufficient to meet our needs for at least the next 12 months from the issuance date of the Consolidated Financial Statements included in this Form 10-K. As we assess growth strategies, we may need to supplement our cash and cash equivalents with outside sources. As part of our liquidity strategy, we will continue to monitor our earnings and cash flow as well as our ability to access the capital markets as needed.
Removed paragraphs (26)
Previous report
Divestiture
Previous report
The estimated impact of the Divestiture on 2024 revenue is approximately $30.0 million.
Previous report
Spin-Off Transaction
Previous report
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”). 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. 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. 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”).
Previous report
Basis of Presentation
Previous report
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”).
Previous report
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. (“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. Prior to the Transfer, the financial statements and accompanying notes of the Xperi Product business were prepared on a combined basis and were derived from the consolidated financial statements and accounting records of the Former Parent as we were not historically held by a single legal entity.
Previous report
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.
Previous report
Key Metrics
Previous report
In evaluating our financial condition and operating performance, we focus on revenue and cash flow from operations. For the year ended December 31, 2023 as compared to the year ended December 31, 2022:
Previous report
Revenue increased by $19.1 million, representing a 4% increase for the year ended December 31, 2023, compared to the prior year. 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. 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.
Previous report
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.
Previous report
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%. The increase was primarily due to employees hired in connection with the Vewd Acquisition in July 2022, an increase in R&D spend on AutoSense programs, and higher stock-based compensation expense, partially offset by a decrease in severance and retention expense in 2023.
Previous report
Goodwill Impairment
Previous report
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. Indicators of potential impairment included a sustained decline in our Former Parent’s stock price during the second half of the third quarter of 2022 reflective of rising interest rates and continued decline in macroeconomic conditions. We proceeded to perform a fair value analysis of the Product reporting unit using the market capitalization approach. Under this approach, we estimated the fair value of the Product reporting unit as of September 30, 2022 using quoted market prices of our common stock over its first ten trading days following the Separation, and a control premium representing the estimated synergies a market participant would achieve upon obtaining control of Xperi. 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.
Previous report
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. Indicators of potential impairment included a significant, sustained decline in the trading price of our common stock during the fourth quarter of 2022. We proceeded to perform a fair value analysis of the Product reporting unit (our sole reporting unit) using the market capitalization approach. Under this approach, we estimated the fair value as of December 31, 2022 using quoted market prices of our common stock as of December 30, 2022, the last trading date of 2022, and a control premium representing the estimated synergies a market participant would achieve upon obtaining control of Xperi. 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.
Previous report
Other (Expense) Income, Net
Previous report
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. 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. In the future, under the Tax Matters Agreement, our Former Parent may utilize certain of our tax attributes generated during pre-Separation periods to reduce its tax liability for tax years ended December 31, 2022 and earlier. If our Former Parent should use such attributes, this would require an adjustment to our tax accounts.
Previous report
Long-Term Debt
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Long-term Debt
Previous report
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.
Previous report
Following the Separation from our Former Parent, our capital structure and sources of liquidity changed significantly. 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.
Previous report
Our current cash and cash equivalents balance is expected to be sufficient to support our operations, capital expenditures and income tax payments, in addition to any investments and other capital allocation needs, for at least the next 12 months from the issuance date of these financial statements.
Reworded paragraphs (30)
Previous wording
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. 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 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.
Current wording
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 our unique audiences to connect with content in a more intelligent, immersive, and personal way. 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 operate in one reportable business segment and group our revenue into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 1,680 employees and more than 35 years of operating experience.
Previous wording
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.
Current wording
In December 2023, we entered into a definitive agreement with Tobii AB (“Tobii”), 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 “AutoSense Divestiture”). The AutoSense Divestiture was completed in January 2024 and has streamlined our business and further enhanced our focus on entertainment markets.
Previous wording
The $19.1 million or 4% increase in revenue for the year ended December 31, 2023, compared to the prior year, 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. 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.
Current wording
The $27.6 million or 5% decrease in revenue for the year ended December 31, 2024, compared to the prior year, was primarily attributable to a decline of $50.4 million in Consumer Electronics due to the AutoSense Divestiture, revenue related to minimum guarantee (“MG”) contracts from prior year where revenue is taken at the time of contract execution, and market-based softness of certain end products. Additionally, we had a decrease of $8.6 million in Media Platform revenue driven principally by lower advertising revenue associated with third-party connected TV inventory as well as revenue related to MG contracts from prior year from our middleware solutions platform where revenue is taken at the time of contract execution. These decreases were partially offset by an increase of $16.3 million in Connected Car revenue as a result of higher revenue in Audio Solutions, HD Radio and AutoStage partially offset by the impact of the AutoSense Divestiture. Additionally, there was an increase of $15.0 million in Pay-TV revenue driven largely by higher MG revenue in core guide products and continued growth in IPTV Solutions revenue.
Previous wording
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.
Current wording
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, content and data costs, hosting fees, 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.
Previous wording
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%. This decrease was primarily attributable to lower hardware product-related costs and lower revenue share accrued and paid, partially offset by higher costs incurred in connection with advertising revenue and NRE services in 2023.
Current wording
Cost of revenue, excluding depreciation and amortization of intangible assets, for the year ended December 31, 2024 was $113.8 million, as compared to $118.6 million for the year ended December 31, 2023, a decrease of $4.8 million, or 4%. This decrease was primarily attributable to lower costs incurred in connection with a decrease in advertising revenue.
Previous wording
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. All research, development and other related costs are expensed as incurred.
Current wording
Research, development and other related costs (“R&D expense”) consist 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 other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs. Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.
Previous wording
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. 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.
Current wording
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 shows. 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 related 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.
Previous wording
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.
Current wording
Selling, general and administrative expenses for the year ended December 31, 2024 were $218.1 million as compared to $233.4 million for the year ended December 31, 2023, a decrease of $15.3 million, or 7%. The decrease was primarily attributable to reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs primarily related to the AutoSense Divestiture and the Perceive Transaction in 2024.
Previous wording
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.
Current wording
We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense was $12.6 million for the year ended December 31, 2024, as compared to $16.6 million for the year ended December 31, 2023, a decrease of $4.0 million, or 24%. The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.
Previous wording
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%. 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.
Current wording
We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense for the year ended December 31, 2024 was $43.4 million, as compared to $57.8 million for the year ended December 31, 2023, a decrease of $14.4 million, or 25%. The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.
Previous wording
Stock-based compensation include restricted stock units, employee stock options and purchases made under our employee stock purchase plan (“ESPP”). 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. In addition, for the year ended December 31, 2022, we recognized $6.9 million of SBC expense in operating results as part of the corporate and shared functional employees’ expenses allocation.
Current wording
We recognized stock-based compensation expense from restricted stock units and purchases made under our employee stock purchase plan (“ESPP”). The decrease in SBC expense for the year ended December 31, 2024, when compared to the prior year, was primarily driven by lower expense for performance-based restricted stock units and reduced employee headcount in 2024.
Previous wording
As a result of continuing to optimize our global real estate footprint and decisions to vacate and sublease certain offices following the Spin-Off, we recorded non-cash impairment charges of $1.7 million to reduce the carrying amount of certain ROU assets and property and equipment, including leasehold improvements, during the year ended December 31, 2023. We determined that we may not be able to fully recover the carrying amount of the leased offices due to how the offices are 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.
Current wording
As a result of optimizing our global real estate footprint and subleasing certain building and offices following the Spin-Off (as defined in Note 1—The Company and Description of Business), we recorded non-cash impairment charges of $1.5 million and $1.7 million to reduce the carrying amount of certain operating lease right-of-use (“ROU”) assets and property and equipment, including related leasehold improvements, during 2024 and 2023, respectively. We determined that we may not be able to fully recover the carrying amount of the leased building and offices due to how they were being used, a significant decrease in the expected market price of the ROU assets and expected delays in subleasing the space based on the condition of the commercial real estate leasing market.
Previous wording
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. 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.
Current wording
The interest expense on debt incurred in connection with the Vewd Acquisition (discussed below in Liquidity and Capital Resources) remained constant in 2024 when compared to 2023.
Previous wording
We did not recognize a goodwill impairment charge for the year ended December 31, 2023.
Current wording
We did not recognize any gain on divestiture in the year ended December 31, 2023.
Previous wording
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 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.
Current wording
For the year ended December 31, 2024, we recorded an income tax expense of $12.4 million on a pretax income of $11.6 million, which resulted in an effective tax rate of 107.5%. The income tax expense of $12.4 million was primarily related to foreign withholding taxes of $10.9 million and U.S. federal income taxes of $3.7 million, partially offset by a tax benefit of $1.3 million from the release of valuation allowance of a foreign subsidiary.
Previous wording
At December 31, 2023, our 2019 through 2023 tax years are generally open and subject to potential examination in one or more jurisdictions. In addition, in the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.
Current wording
At December 31, 2024, our 2020 through 2024 tax years are generally open to examination. In the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.
Previous wording
(1) Excludes $12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.
Current wording
Included $12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.
Previous wording
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 $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. This decrease resulted primarily from $12.7 million of capital expenditures, and $4.9 million in payment of withholding taxes on net share settlement of equity awards, partially offset by $11.9 million in proceeds received from the issuance of common stock under the ESPP.
Current wording
Our primary liquidity and capital resources are our cash and cash equivalents on hand. Cash and cash equivalents were $130.6 million at December 31, 2024, a decrease of $23.8 million from $154.4 million, including $12.3 million classified as held for sale in connection with the AutoSense Divestiture, as of December 31, 2023. This decrease resulted primarily from cash used in operations of $55.3 million, $20.0 million in repurchases of common stock, $7.2 million in payments of withholding taxes on net share settlement of equity awards and $16.8 million of capital expenditures, including capitalized internal-use software costs, partially offset by $67.8 million in net proceeds received from divestitures, and $7.9 million in proceeds from the issuance of common stock under the ESPP.
Previous wording
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.
Current wording
We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2024, fixed lease payment obligations amounted to $38.5 million, with $16.9 million payable within 12 months. See Note 10—Leases of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities.
Previous wording
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. Future interest payments associated with the debt total $4.5 million, with $3.0 million payable within 12 months.
Current wording
As of December 31, 2024, we had outstanding short-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. On February 21, 2025, we voluntarily made a full principal payment of $50.0 million plus accrued interest by using a combination of cash on hand and a new long-term financing facility through the securitization of our accounts receivable as described below.
Previous wording
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. These purchase obligations represent commitments under enforceable and legally binding agreements, and do not represent the entire anticipated purchases in the future. See Note 11—Commitments and Contingenciesof the Notes to Consolidated Financial Statements for additional information on our purchase obligations.
Current wording
Our purchase obligations primarily consist of noncancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2024, we had purchase obligations of $137.9 million, with $47.9 million payable within 12 months. These purchase obligations represent commitments under enforceable and legally binding agreements, and do not represent the entire anticipated purchases in the future. See Note 11—Commitments and Contingenciesof the Notes to Consolidated Financial Statements for additional information on our purchase obligations.
Previous wording
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. At this time, we are unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time.
Current wording
As of December 31, 2024, we had accrued $1.3 million of unrecognized tax benefits in long-term income taxes payable related to uncertain tax positions, which included $0.1 million of accrued interest and penalties. At this time, we are unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease over time.
Previous wording
Net cash used in investing activities was $12.9 million for the year ended December 31, 2023, which was primarily related to capital expenditures.
Current wording
Net cash used in investing activities was $12.9 million for the year ended December 31, 2023, which was primarily related to capital expenditures, including capitalized internal-use software.
Previous wording
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 cash equivalents. There can be no assurance that current expectations will be realized and plans are subject to change upon further review of our capital expenditure needs.
Current wording
Our capital expenditures for property and equipment consist primarily of purchases of computer hardware and software, capitalized internal-use software, information systems, and production and test equipment. We expect capital expenditures in 2025 to be approximately $20.0 million. These expenditures are expected to be paid with existing cash and cash equivalents. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.
Previous wording
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. If a certain qualified spin-off transaction occurs, the interest rate will be increased to the greater of (a) 6.00% and (b) the sum of (i) the highest interest rate payable under any credit facility or bonds, debentures, notes or similar instruments where we or any guarantor borrows money or guarantees obligations on a secured basis on or after the date of such spin-off transaction, plus (ii) 2.00%. It was determined that the Spin-Off completed on October 1, 2022 did not trigger any change in the interest rate of the debt. The Promissory Note matures 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, under the Promissory Note without premium or penalty. In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.
Current wording
In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) 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, all of which was outstanding at December 31, 2024. Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to potential adjustments as described in Note 9—Debtto the Consolidated Financial Statements included in this Form 10-K. The Promissory Note matures 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, under the Promissory Note without premium or penalty. On February 21, 2025, we voluntarily made a full principal payment of $50.0 million plus accrued interest by using a combination of cash on hand and a new long-term financing facility through the securitization of our accounts receivable as described below.
Previous wording
Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. There can be no assurance that equity or debt financing will be available when needed or, if available, that such equity financing will be on terms satisfactory to us and not dilutive to our then-current stockholders or that debt financing will not impose significant restrictions on the operation of our business.
Current wording
Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. Equity or debt financing may not be available when needed or, if available, equity or debt financing may not be on terms satisfactory to us.
Previous wording
We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives. 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.
Current wording
We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives. 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 Part I, Item 1A of this Form 10-K.
Previous wording
Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. 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. Actual results could differ from those estimates, and material effects on our operating results and financial position may result.
Current wording
Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. 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 intangible assets, business combinations, recognition and measurement of deferred income tax assets and liabilities, and the assessment of unrecognized tax benefits. Actual results could differ from those estimates, and material effects on our operating results and financial position may result.
Previous wording
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. 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.
Current wording
We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not more-likely-than-not, 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.
Previous wording
Our policy is to classify accrued interest and penalties related to the accrued liability for unrecognized tax benefits in the provision for income taxes. 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.
Current wording
Our policy is to classify accrued interest and penalties related to the accrued liability for unrecognized tax benefits in the provision for income taxes. For the years ended December 31, 2024 and 2023, we recognized interest and penalties related to unrecognized tax benefits of an immaterial amount and $0.3 million, respectively. See Note 14—Income Taxes of the Notes to Consolidated Financial Statements for additional detail.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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 right-of-use (“ROU”) assets and property and equipment, including leasehold improvements, during the year ended December 31, 2022. 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.