Xperi Inc.

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 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 1,630 employees and more than 35 years of operating experience.

Current wording

We are a leading media and entertainment technology company. Our technologies are integrated into consumer devices, connected cars, and a variety of media platforms worldwide, enabling our unique audiences to connect with entertainment content in a more intelligent, immersive, and personal way. As our audiences engage with content on our platform, we operate a global, cross-screen advertising solution that enables brands to reach millions of engaged consumers across our rapidly expanding digital entertainment ecosystem, 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 1,380 employees and more than 35 years of operating experience.

Previous wording

Macroeconomic conditions—including rising inflation and interest rates, recessionary concerns, financial and credit market volatility, shifts in economic policy, reduced discretionary spending by consumers and businesses, tariffs, and global supply chain disruptions—have adversely affected, and may continue to affect, our business and that of our customers. While we remain committed to closely monitoring these macroeconomic developments and intend to adapt our business strategies as needed, the ultimate impact on our business, operating results, and financial condition remains uncertain.

Current wording

Macroeconomic conditions—including geopolitical conflicts in the Middle East, disruptions in global energy supplies, memory chip shortages, inflationary pressures, elevated interest rates, recessionary risks, volatility in financial and credit markets, changes in economic policy, reduced discretionary spending, tariffs, and global supply chain disruptions—have adversely affected, and may continue to adversely affect, our business and the businesses of our customers. While we closely monitor these developments and adjust our strategies where appropriate, the extent and duration of their impact on our business, operating results, and financial condition remain uncertain.

Previous wording

On November 1, 2025, we approved a restructuring plan to improve cost efficiency and better align our operating structure with our long-term strategies and current market conditions. This plan involves reducing our global workforce by approximately 250 employees and impacts all business and functional areas. In connection with this plan, we estimate that we will incur between $16.0 million and $18.0 million of restructuring and related charges, substantially all of which consists of employee severance and related costs. This plan became effective immediately upon approval and we expect substantially all the restructuring activities to be completed by the end of the first half of 2026. We estimate that these reductions, once completed, will generate cost savings of $30.0 million to $35.0 million on an annualized basis.

Current wording

In November 2025, we approved a restructuring plan designed to improve cost efficiency and better align our operating structure with our long-term strategies and prevailing market conditions. The plan involved a reduction of approximately 250 employees across all business and functional areas and became effective immediately. In connection with this plan, we incurred restructuring and related charges of $13.9 million and $0.3 million in the fourth quarter of 2025 and the first quarter of 2026, respectively, substantially all of which consisted of employee severance and related costs. As of March 31, 2026, approximately $1.0 million of restructuring charges remained accrued and are expected to be substantially settled by the end of the second quarter of 2026. Upon completion, we estimate that the reductions will generate annualized savings in the range of approximately $30 million to $35 million. For further information, refer to Note 14—Restructuringof the Notes to Condensed Consolidated Financial Statements.

Previous wording

The following table presents our operating results for the periods indicated as a percentage of revenue:

Current wording

The following table presents our historical operating results for the periods indicated as a percentage of revenue:

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

Revenue decreased by $21.3 million, or 16%, for the three months ended September 30, 2025 compared to the same period in the prior year. The decrease was primarily driven by a decrease of $31.9 million in Pay-TV revenue, partially offset by a combined increase of $11.0 million in Connected Car and Consumer Electronics revenue.

Current wording

Revenue increased by $0.2 million, or approximately 0%, for the three months ended March 31, 2026, compared to the same period in the prior year. The increase was primarily driven by $8.5 million of growth in Connected Car and Media Platform revenue, partially offset by declines of $8.3 million in Consumer Electronics and Pay-TV revenue.

Previous wording

The decline in Pay-TV revenue reflects lower revenue in core guide products and consumer hardware and subscription services, largely due to higher minimum guarantee (“MG”) revenue recognized in the third quarter of 2024. This was partially offset by continued growth in TiVo video-over-broadband (“IPTV”) solutions revenue.

Current wording

These increases were partially offset by a $4.4 million decrease in Consumer Electronics revenue, primarily attributable to the absence of certain MG and settlement revenue recognized in the prior year, as well as memory-related challenges in certain end product categories. Pay‑TV revenue decreased by $3.9 million, reflecting declines in core guide products, consumer hardware, and related subscription revenue. This decline was partially offset by continued growth in TiVo video-over-broadband (“IPTV”) solutions.

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, 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 services.

Current wording

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, 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 services.

Previous wording

Cost of revenue, excluding depreciation and amortization of intangible assets, for the nine months ended September 30, 2025 was $92.2 million, as compared to $86.2 million in the same period of the prior year, an increase of $6.0 million, or 7%. The increase was primarily driven by higher costs associated with advertising revenue, third-party royalties, and personnel-related expenses, partially offset by cost reductions resulting from the AutoSense Divestiture and the Perceive Transaction.

Current wording

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended March 31, 2026 was $30.9 million, compared to $29.6 million for the same period in the prior year, representing an increase of $1.3 million, or 4%. The increase was primarily attributable to higher costs associated with advertising revenue.

Previous wording

Selling, general and administrative expenses for the three months ended September 30, 2025 were $42.5 million, as compared to $56.5 million in the same period of the prior year, a decrease of $14.0 million, or 25%. The decrease was primarily attributable to reduced employee headcount, lower SBC expense, and a decrease in certain one-time transaction costs.

Current wording

Selling, general and administrative expenses for the three months ended March 31, 2026 were $41.8 million, compared to $48.7 million for the same period in the prior year, representing a decrease of $6.9 million, or 14%. The decrease was primarily attributable to lower employee-related costs resulting from restructuring activities, reduced SBC expense, and decreased information technology spending.

Previous wording

The following table sets forth our SBC expense for the three and nine months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table sets forth our SBC expense for the three months ended March 31, 2026 and 2025 (in thousands):

Previous wording

We recognized SBC expense from restricted stock units (“RSUs”) and purchases made under our employee stock purchase plan (“ESPP”). The decreases of $5.6 million and $13.2 million in SBC expense for the three and nine months ended September 30, 2025, respectively, when compared to the same periods of the prior year, was primarily driven by RSUs granted over time at lower valuations, lower expense for performance-based restricted stock units and reduced employee headcount.

Current wording

We recognized SBC expense from restricted stock units and purchases made under our employee stock purchase plan (“ESPP”). The decrease of $4.3 million in SBC expense for the three months ended March 31, 2026, when compared to the same period of the prior year, was primarily driven by reduced employee headcount, and RSUs granted over time at lower valuations.

Previous wording

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense for the three months ended September 30, 2025 was $3.5 million, as compared to $2.9 million in the same period of the prior year, an increase of $0.6 million, or 19%. The increase was primarily driven by increased capitalized internal-use software costs over the past 12 months.

Current wording

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense for the three months ended March 31, 2026 was $4.3 million, as compared to $2.9 million in the same period of the prior year, an increase of $1.4 million, or 47%. The increase was primarily driven by increased capitalized internal-use software costs over the past 12 months.

Previous wording

We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. For the three and nine months ended September 30, 2025, amortization expense decreased by $2.9 million and $6.2 million, or 27% and 19%, respectively, as compared to the same periods of the prior year. The decreases were primarily due to certain intangible assets becoming fully amortized over the past 12 months.

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 three months ended March 31, 2026 was $8.0 million, as compared to $9.7 million in the same period of the prior year, a decrease of $1.7 million, or 17%. The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

Previous wording

Interest and other income, net, was lower in the three months ended September 30, 2025, as compared to the same period in the prior year, principally due to foreign currency transaction losses recognized in the third quarter of 2025.

Current wording

Interest and other income, net, was lower in the three months ended March 31, 2026, as compared to the same period in the prior year, principally due to foreign currency transaction losses recognized in the first quarter of 2026.

Previous wording

The interest expense on our debt remained constant in the three and nine months ended September 30, 2025, when compared to the same periods in the prior year.

Current wording

The interest expense on debt was $0.7 million in the three months ended March 31, 2026 and remained constant when compared to the same period in the prior year.

Previous wording

For the three and nine months ended September 30, 2024, we recorded an income tax expense of $2.9 million and $16.4 million on a pretax loss of $16.9 million and $47.4 million, respectively, which resulted in an effective tax rate of (17.1)% and (34.7)%, respectively. The income tax expense for the three and nine months ended September 30, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S. federal income taxes, and state income taxes.

Current wording

For the three months ended March 31, 2026, we recorded an income tax expense of $10.1 million on a pretax income of $2.3 million, which resulted in an effective tax rate of 441.4%. The income tax expense for the three months ended March 31, 2026 was primarily related to foreign income taxes and foreign withholding taxes.

Previous wording

For the three and nine months ended September 30, 2025, we recorded an income tax expense of $4.8 million and $12.9 million on a pretax loss of $1.3 million and $26.3 million, respectively; which resulted in an effective tax rate of (369.0)% and (49.1)%, respectively. The income tax expense for the three and nine months ended September 30, 2025 was primarily related to foreign withholding taxes and foreign income taxes.

Current wording

For the three months ended March 31, 2025, we recorded an income tax expense of $3.5 million on a pretax loss of $14.9 million, which resulted in an effective tax rate of (23.5)%. The income tax expense for the three months ended March 31, 2025 was primarily related to foreign withholding taxes and foreign income taxes.

Previous wording

Our primary liquidity and capital resources are our cash and cash equivalents and borrowings available under an accounts receivable securitization program (the “AR Facility”) with PNC Bank, National Association (“PNC”). Cash and cash equivalents were $96.8 million at September 30, 2025, a decrease of $33.8 million from $130.6 million at December 31, 2024. This decrease resulted primarily from cash used in operations of $4.6 million, $50.0 million in repayment of the Vewd Software Holdings Limited (“Vewd”) senior unsecured promissory note, $14.6 million of capital expenditures, including capitalized internal-use software costs, and $6.6 million in payments of withholding taxes on net share settlement of equity awards, partially offset by $3.3 million in proceeds from the issuance of common stock under our ESPP, and $40.0 million in loan proceeds borrowed under the AR Facility with PNC. For detailed information regarding the repayment of the Vewd debt and the AR Facility, refer to “Long-Term Debt Financing” below.

Current wording

Our primary liquidity and capital resources are our cash and cash equivalents and borrowings available under an accounts receivable securitization program (the “AR Facility”) with PNC Bank, National Association and PNC Capital Markets LLC (“PNC”). Cash and cash equivalents were $70.4 million at March 31, 2026, a decrease of $26.4 million from $96.8 million at December 31, 2025. This decrease resulted primarily from cash used in operations of $18.0 million, $4.8 million of capital expenditures, including capitalized internal-use software costs, and $3.6 million in payments of withholding taxes on net share settlement of equity awards. For detailed information regarding the AR Facility, refer to “Long-Term Debt Financing” below. Subsequent to quarter end, on April 6, 2026, we received the $12.0 million indemnification holdback related to the Perceive Transaction completed in 2024.

Previous wording

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 September 30, 2025, 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 approximately $20.0 million. We did not repurchase any common stock during the nine months ended September 30, 2025. As of September 30, 2025, 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 wording

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 March 31, 2026, 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 approximately $20.0 million. We did not repurchase any common stock during the three months ended March 31, 2026. As of March 31, 2026, 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.

Previous wording

Net cash used in operating activities was $56.6 million for nine months ended September 30, 2024, primarily due to our net loss of $63.8 million being further adjusted by $55.6 million of changes in operating assets and liabilities, including payment of employee annual bonuses for 2023 performance, an increase of $43.5 million in unbilled contracts receivable, and $22.9 million of a non-cash gain recognized from the AutoSense Divestiture, partially offset by non-cash items such as SBC expense of $45.3 million, amortization of intangible assets of $33.0 million, and depreciation expense of $9.8 million.

Current wording

Net cash used in operating activities was $18.0 million for the three months ended March 31, 2026, primarily due to our net loss of $7.8 million being further adjusted by $28.2 million of changes in operating assets and liabilities, including an increase of $17.8 million in unbilled contracts receivable and payment of employee annual bonuses for 2025 performance, partially offset by non-cash items such as SBC expense of $7.8 million, amortization of intangible assets of $8.0 million, and depreciation expense of $4.3 million.

Previous wording

Net cash used in operating activities was $4.6 million for the nine months ended September 30, 2025, primarily due to our net loss of $39.3 million being further adjusted by $32.8 million of changes in operating assets and liabilities, including payment of employee annual bonuses for 2024 performance, partially offset by non-cash items such as SBC expense of $32.1 million, amortization of intangible assets of $26.9 million, and depreciation expense of $9.8 million.

Current wording

Net cash used in operating activities was $22.3 million for the three months ended March 31, 2025, primarily due to our net loss of $18.4 million being further adjusted by $28.4 million of changes in operating assets and liabilities, including payment during the quarter of employee annual bonuses for 2024 performance, partially offset by non-cash items such as SBC expense of $12.1 million, amortization of intangible assets of $9.7 million, and depreciation expense of $2.9 million.

Previous wording

Net cash used in investing activities was $14.6 million and $12.9 million for the nine months ended September 30, 2025 and 2024, respectively, which was primarily related to capital expenditures, including capitalized internal-use software.

Current wording

Net cash used in investing activities was $4.8 million and $4.2 million for the three months ended March 31, 2026 and 2025, respectively, which was related to capital expenditures, including capitalized internal-use software.

Previous wording

Our capital expenditures for property and equipment consist primarily of capitalized internal-use software, purchases of computer hardware and 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. Current expectations may not be realized, and plans may be revised following a reevaluation of our capital expenditure requirements.

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 2026 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

Net cash used in financing activities was $14.6 million for the nine months ended September 30, 2025, primarily due to the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note, and $6.6 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $40.0 million in loan proceeds borrowed under the AR Facility with PNC and $3.3 million in proceeds from the issuance of common stock under our ESPP.

Current wording

Net cash used in financing activities was $16.1 million for the three months ended March 31, 2025, primarily due to $5.3 million in payment of withholding taxes related to net share settlement of equity awards, and the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note as described in “Long-Term Debt Financing” below, partially offset by $40.0 million in loan proceeds borrowed under the AR Facility with PNC.

Previous wording

In connection with the acquisition of 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 bore an interest rate of 6.00% per annum, subject to certain potential adjustments. The Promissory Note was scheduled to mature on July 1, 2025. We were permitted, at any time and on any one or more occasions, to 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.

Current wording

In connection with the acquisition of Vewd in July 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 bore an interest rate of 6.00% per annum, subject to certain potential adjustments. The Promissory Note was scheduled to mature on July 1, 2025. We were permitted, at any time and on any one or more occasions, to 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

Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility and selected the monthly Term SOFR Rate (as defined in the RFA). 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 $2.6 million for the next 12 months and may vary with changes in interest rates. As of September 30, 2025, we were in compliance with the covenants under the RF Agreements. For more information on our AR Facility, see Note 8—Debt and Receivables Securitization.

Current wording

Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility and selected the monthly Term SOFR Rate (as defined in the RFA). 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 $2.3 million for the next 12 months and may vary with changes in interest rates. In December 2025, we repaid $1.1 million of the outstanding principal as the aggregate outstanding principal at the time temporarily exceeded the eligibility limit of the receivables and subsequently drew down the same amount. As of March 31, 2026, we were in compliance with the covenants under the RF Agreements.

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 Part I, Item 1A of our Form 10-K and Part II, Item 1A of this Quarterly Report.

Current wording

We may supplement our short-term liquidity needs with access to capital markets, if necessary, and further 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 our Form 10-K.

Previous wording

During the nine months ended September 30, 2025, there were no significant changes in our critical accounting estimates. For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

Current wording

During the three months ended March 31, 2026, there were no significant changes in our critical accounting estimates. For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.