Xperi Inc.

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Xperi Inc. (“Xperi” or the “Company”) is a leading media and entertainment technology company headquartered in Silicon Valley with operations around the world. The Company’s technologies are integrated into consumer devices, connected cars, and a variety of media platforms worldwide, enabling its unique audiences to connect with entertainment content in a more intelligent, immersive, and personal way. As the Company’s audiences engage with content on its platform, the Company operates a global, cross-screen advertising solution that enables brands to reach millions of engaged consumers across its rapidly expanding digital entertainment ecosystem, driving increased value for its partners, customers, and consumers. The Company operates inone reportable segment and groups its revenue into four categories: Pay-TV, Consumer Electronics, Connected Car, and Media Platform.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited Interim Financial Statements

The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the SEC for interim financial information. The amounts as of December 31, 2025 have been derived from the Company’s annual audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026 (the “Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Form 10-K.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026 or any future period and the Company makes no representations related thereto.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require management’s most significant, challenging, and subjective judgment include the estimation of licensees’ quarterly royalties prior to receiving the royalty reports, the determination of stand-alone selling price and the transaction price in an arrangement with multiple performance obligations, the fair value of note receivable and deferred consideration in connection with the AutoSense in-cabin safety business and related imaging solutions (the “AutoSense Divestiture”), the assessment of useful lives and recoverability of other intangible assets and long-lived assets, recognition and measurement of current and deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and valuation of performance-based awards with a market condition. Actual results experienced by the Company may differ from management’s estimates.

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable, unbilled contracts receivable, a note receivable and deferred consideration from divestitures. The Company maintains cash and cash equivalents with large financial institutions, and at times, the deposits may exceed the federally insured limits. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. In addition, the Company has cash and cash equivalents held in international bank accounts that are denominated in various foreign currencies and has established risk management strategies designed to minimize the impact of certain currency exchange rate fluctuations.

The Company believes that any concentration of credit risk in its accounts receivable and unbilled contracts receivable is substantially mitigated by its evaluation process and the high level of creditworthiness of its customers. The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral.

One customer accounted for 10% or more of total revenue for the three months ended March 31, 2026, whereasno customer accounted for 10% or more of total revenue for the three months ended March 31, 2025. As of March 31, 2026, no customer represented 10% or more of the Company’s net balance of accounts receivable, andone customer exceeded 10% of the Company’s combined net balance of current and noncurrent unbilled contracts receivable. As of December 31, 2025, no customer represented 10% or more of the Company’s net balance of accounts receivable, andtwo customers exceeded 10% of the Company’s combined net balance of current and noncurrent unbilled contracts receivable.

As part of the consideration for the AutoSense Divestiture, the Company received a note receivable and deferred consideration from Tobii AB (“Tobii”). Both of these instruments are exposed to credit risk arising from default on repayment from Tobii. The credit risk associated with the note receivable is mitigated by establishing a floating lien and security interest in certain of Tobii’s assets, rights, and properties, whereas the deferred consideration is not secured by any collateral. The Company utilizes valuation methodologies such as internally generated cash flow projections on the principal and interest of each instrument, along with the review of certain other data points, to determine the likelihood that the note receivable or deferred consideration will be repaid. Further, the Company assesses each instrument for credit losses and provides a reserve if full payment on the instruments may not occur as expected, in which case the reserve reflects the excess of the amortized cost basis over the results of the cash flow projections. The Company expects Tobii to make full payment on both instruments in accordance with the underlying agreement. Accordingly, no allowance for credit losses was recorded as of March 31, 2026 and December 31, 2025.

Recent Accounting Pronouncements

The following are Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are relevant to the Company’s consolidated financial statements and related disclosures.

Accounting Standard Adopted

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The updated guidance simplifies the methodology of estimating expected credit losses for outstanding trade and other related receivables arising from revenue transactions by no longer requiring forecasted information to be considered, but only historical and current economic conditions pertaining to the collectibility of such receivables, if elected as a practical expedient upon adoption. The Company adopted this guidance in the first quarter of 2026 on a prospective basis and elected the practical expedient. The impact upon adoption was not material to its consolidated financial statements.

Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods. The standard will become effective for the Company’s 2027 annual financial statements and interim financial statements thereafter and may be applied prospectively to periods after the adoption date or retrospectively for all prior periods presented in the financial statements, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This updated guidance eliminates the consideration of software project development stages and introduces additional considerations for the existing probability threshold assessment on completing a software development project. Entities are required to assess whether significant uncertainty exists in the development activities of the software before capitalizing any software costs, and such uncertainty is considered to exist if the project involves any technological innovations with novel and unproven features or unidentified significant performance requirements. The updated guidance will become effective for the Company in the first quarter of 2028 and may be adopted on eithera prospective basis, full retrospective basis, or modified prospective basis with a cumulative-effect adjustment through retained earnings. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

NOTE 2 – REVENUE

The Company derives the majority of its revenue from licensing its technologies and solutions to customers and groups its revenue into four categories: Pay-TV, Consumer Electronics (“CE”), Connected Car, and Media Platform product categories. Refer to Note 3—Revenue in the notes to the consolidated financial statements in the Form 10-K for detailed information regarding how revenue is recognized from these product categories.

Revenue from the Pay-TV category primarily includes licensing of the Company’s Pay-TV solutions, including Electronic Program Guides, TiVo video-over-broadband (“IPTV”) Solutions, Personalized Content Discovery and enriched Metadata. Revenue from the CE category primarily includes licensing of the Company’s audio technologies to CE manufacturers or their supply partners, generally in the form of royalty revenue based on units shipped or manufactured. Similar to CE, revenue from the Connected Car category primarily includes licensing of the Company’s digital radio solutions, automotive infotainment and related offerings to automotive manufacturers or their supply chain partners. Revenue from the Media Platform category primarily includes advertising, TV viewership data, metadata for ad measurement and programming analytics, and licensing of the Company’s middleware solutions.

The Company also generates non-recurring engineering (“NRE”) revenue within all of its product categories.

Revenue from each of advertising and NRE services was less than 10% of total revenue for all periods presented.

Disaggregation of Revenue

The Company’s revenue that is recognized over time consists primarily of per unit royalties, per-subscriber per-month or monthly license fees, single performance obligations satisfied over time, and NRE services. Revenue that is recognized at a point in time consists primarily of fixed fee or minimum guarantee licensing contracts, hardware products, advertising and settlements/recoveries.

The following table summarizes revenue by timing of recognition (in thousands):

The following table summarizes revenue by product category (in thousands):

The following table summarizes revenue by geographic location (in thousands):

(1)

For the three months ended March 31, 2026 and 2025, the Company recognized $47.2 million and $45.4 million of revenue from the U.S., which represented 41% and 40% of total revenue for the respective periods.

The Company recognized a significant amount of revenue from licensees headquartered in Japan, China, and South Korea, which are within the Asia Pacific region. Revenue recognized from these countries is shown in the following table (in thousands):

The following table presents additional revenue disclosures (in thousands):

(1)

True ups represent the differences between the Company’s quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in reports that are generally received in the following period and may include other changes in estimates. Recoveries represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company’s inquiries or compliance audits. Settlements represent resolutions of disputes or litigation during the period for past royalties owed.

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue that has not yet been recognized. As of March 31, 2026, the Company’s remaining performance obligations and the period over which they are expected to be recognized were as follows (in thousands):

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2026 and 2025 (in thousands):

NOTE 3 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

Prepaid expenses and other current assets consisted of the following (in thousands):

Property and equipment, net consisted of the following (in thousands):

(1)

Includes $14.2 million and $11.3 million as of March 31, 2026 and December 31, 2025, respectively, of accumulated amortization associated with capitalized internal-use software.

The following table summarizes the capitalization and amortization of internal-use software for the three months ended March 31, 2026 and 2025 (in thousands):

Accrued liabilities consisted of the following (in thousands):

NOTE 4 – FINANCIAL INSTRUMENTS

Non-marketable Equity Securities

As of March 31, 2026 and December 31, 2025, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of$4.5 millionand $4.7 million, respectively. No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three months ended March 31, 2026 and 2025.

Derivative Instruments

The Company uses a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. These contracts have maturities that are generally twelve months or less. Fair values for derivative financial instruments are based on prices computed using third-party valuation models. All the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing.

Cash Flow Hedges

The Company designates its foreign currency forward contracts as cash flow hedges. The effective portion of the gain or loss on the derivatives are reported as a component of accumulated other comprehensive loss (“AOCL”) in stockholders’ equity and reclassified into net loss on the condensed consolidated statements of operations (unaudited) in the period the hedged transactions are settled.

The notional and fair values of all derivative financial instruments were as follows (in thousands):

All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other. Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's condensed consolidated balance sheets on a net basis.

The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s condensed consolidated balance sheets were as follows (in thousands):

The changes in AOCL related to the cash flow hedges consisted of the following (in thousands):

The following table summarizes the gains (losses) recognized upon settlement of the hedged transactions in the condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 (in thousands):

NOTE 5 – FAIR VALUE

The Company carries its financial instruments at fair value using an established fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value, with the exception of its note receivable, deferred consideration from divestitures, and long-term debt.

There are three levels of inputs used in the fair value hierarchy as follows:

The Company’s derivative financial instruments (as described in Note 4—Financial Instruments), consisting of foreign currency forward contracts, are reported at fair value on a recurring basis and classified as Level 2.

Financial Instruments Not Recorded at Fair Value

The following table presents the Company’s financial assets and liabilities recorded at their carrying amount, but for which the fair value is disclosed (in thousands):

(1)

Includes $12.0 million and $11.9 million as of March 31, 2026 and December 31, 2025, respectively, of the net carrying amount of the holdback consideration from the Perceive Transaction (as described in Note 6—Divestitures), which approximates its associated fair value and is classified as current in the consolidated balance sheets.

The fair value of the note receivable, including accrued interest, and the deferred consideration resulting from the AutoSense Divestiture and the Perceive Transaction were estimated based on an income and market approach with valuation inputs such as the U.S. Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments. They are classified within Level 2 of the fair value hierarchy.

The Company’s long-term debt includes the AR Facility (as defined in Note 8—Debt and Receivables Securitization) with a floating interest rate based on market conditions, whose carrying amount approximates its fair value. Long-term debt is classified within Level 2 of the fair value hierarchy.

NOTE 6 – DIVESTITURES

Perceive Corporation

In August 2024, the Company and one of its former subsidiaries, Perceive (“Seller”), of which the Company owned approximately 76.4% of the equity interests, entered into an Asset Purchase Agreement (the “Agreement”) with Amazon.com Services LLC (“Buyer”) pursuant to which Buyer agreed to purchase and assume from Seller substantially all the assets and certain liabilities of Seller for $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction to secure the Company’s and Seller’s indemnification obligations (the “Perceive Transaction”). The Perceive Transaction was subsequently completed in October 2024.

The Perceive Transaction did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

Holdback Consideration

Upon completion of the Perceive Transaction, the holdback consideration of $12.0 million was estimated to have a then present value of $11.3 million, resulting in a discount of $0.7 million. For the three months ended March 31, 2026 and 2025, the amount of discount accreted as interest income was immaterial.

The net carrying amount of the holdback consideration is as follows (in thousands):

AutoSense In-cabin Safety Business and Related Imaging Solutions

In January 2024, the AutoSense Divestiture was completed for total consideration of $44.3 million, comprised of $10.8 million of cash, a note receivable from Tobii (the “Tobii Note”) of $27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $15.0 million, which was estimated to have a fair value of $5.8 million based on a present value factor as of January 31, 2024. In addition, there may be potential earnout payments (as described under Contingent Consideration below) payable in 2031, contingent upon the future success of the divested AutoSense in-cabin safety business.

In connection with the AutoSense Divestiture, the Company also recorded a liability of $7.1 million for potential indemnification of certain pre-closing date matters.

Note Receivable from Tobii AB

The Tobii Note, with a fixed interest rate of 8% per annum, matures on April 1, 2029 and is payable in three annual installments. Tobii may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, along with accrued interest, without any penalty. In the event of default, an additional interest of 2% per annum may be applied to the outstanding balance of the Tobii Note, and the Company has the right to demand full or partial payment on the outstanding balance with unpaid interest.

The Tobii Note is secured by a floating lien and security interest in certain of Tobii’s assets, rights, and properties, and contains customary affirmative and negative covenants including the restrictions on incurring certain indebtedness, and certain change of control and asset sale events, but does not include any financial covenants.

The Tobii Note has the following scheduled principal repayments (in thousands):

The Company elected to present accrued interest within the carrying amount of note receivable, noncurrent, in the condensed consolidated balance sheets. The carrying amount of the Tobii Note is as follows (in thousands):

For the three months ended March 31, 2026 and 2025, the Company recognized interest income of $0.5 million and $0.6 million, respectively.

Deferred Consideration

The deferred consideration consists of guaranteed future cash payments, which are scheduled to be made by Tobii in four annual payments as follows (in thousands):

At the closing date of the Tobii Note, there was $9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment. For each of the three months ended March 31, 2026 and 2025, the Company accreted $0.3 million of the discount as interest income.

The net carrying amount of the deferred consideration is as follows (in thousands):

Contingent Consideration

The earnout represents potential incremental cash consideration, and the payment is contingent upon the achievement of certain targeted shipments, between January 1, 2024 and December 31, 2030, of qualified automotive products featuring the AutoSense in-cabin safety technology and the related imaging solutions.

At the closing date of the AutoSense Divestiture, the Company elected to apply the gain contingency guidance under Accounting Standards Codification No. 450—Contingencies, as it could not reasonably estimate shipment amounts. As a result, the Company deferred the recognition of the contingent consideration until it becomes realized or realizable.

NOTE 7 –INTANGIBLE ASSETS, NET

Identified intangible assets consisted of the following (in thousands):

As of March 31, 2026, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

NOTE 8 –DEBT AND RECEIVABLES SECURITIZATION

PNC AR Facility

In February 2025, the Company borrowed $40.0 million under an accounts receivable securitization program (the “AR Facility”) established with PNC Bank (“PNC”). Under the AR Facility, which matures on February 21, 2028, certain of the Company’s wholly-owned subsidiaries (collectively, the “Originators”) periodically transfer and sell their trade receivables such as accounts receivable and unbilled contracts receivable, along with all related rights to Xperi SPV LLC (“Xperi SPV”), the Company’s special purpose subsidiary, while the Company manages the associated collection and administrative responsibilities. In turn, Xperi SPV may borrow funds from PNC from time to time, secured by liens on the trade receivables.

The maximum amount potentially available to borrow, based on the eligibility of the trade receivables, is $55.0 million. Interest on the outstanding balance is accrued at the sum of the (i) monthly Term SOFR Rate (as defined in the RFA) and (ii)1.90%. Additional interest of 0.50% is accrued on the unused borrowing limit. Interest is payable on a monthly basis.

The Company accounted for the $40.0 million borrowed under the AR Facility as a secured borrowing. As of March 31, 2026, trade receivables totaling $120.6 million were included in the balance sheet of Xperi SPV and pledged as collateral against the borrowing.

The Company capitalized fees incurred to establish the securitization program of $1.2 million, which are amortized on a straight-line basis over the commitment term ofthree years. Fees amortized were immaterial for the three months ended March 31, 2026 and 2025, and recognized under “interest expense—debt” in the condensed consolidated statements of operations.

The AR Facility contains customary covenants included in debt arrangements, and certain liquidity and related covenants involving various types of financial performance measures. If, at any time, the aggregate outstanding principal exceeds the eligibility limit of the receivables, the Company is required to repay the excess amount borrowed immediately. The Company was in compliance with all covenants as of March 31, 2026.

Refer to Note 9—Debt and Receivables Securitizationin the notes to the consolidated financial statements in the Form 10-K for further information related to the AR Facility.

Vewd Promissory Note

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, the Company issued a senior unsecured promissory note (the “Promissory Note”), scheduled to mature on July 1, 2025, to the sellers of Vewd in a principal amount of $50.0 million. Indebtedness outstanding under the Promissory Note bore an interest rate of 6.00% per annum, payable in cash on a quarterly basis. In February 2025, the Company repaid the full outstanding principal along with accrued interest, with $40.0 million in loan proceeds from the AR Facility with PNC (as described above) and the remainder with cash on hand.

Total interest expense for debt was $0.7 million for each of the three months ended March 31, 2026 and 2025.

NOTE 9 – NET LOSS PERSHARE

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

NOTE 10 – STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Equity Incentive Plans

In October 2022, the Company adopted the Xperi Inc. 2022 Equity Incentive Plan (the “2022 EIP”), which allows the Company to grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company. These awards are typically in the form of stock options, restricted stock units (“RSUs”), and performance-based awards.

As of March 31, 2026, there were 5.8 million shares reserved for future grants under the 2022 EIP.

Stock Options

The Company has not granted additional stock options since October 2022. All outstanding stock options were fully vested and exercisable as of March 31, 2026, and were immaterial for financial statement disclosure purposes.

Restricted Stock Units

RSUs are granted at fair market value on the date of grant and typically have a time-based service condition with a vesting period of three or four years. RSUs also include performance-based awards (“PSUs”), which consist of both service and performance conditions and vest typically over three years.

RSU activity for the three months ended March 31, 2026 is as follows (in thousands, except per share amounts):

Performance-Based Awards

From time to time, the Company may grant PSUs to senior executives, certain employees, and consultants. PSUs usually have a service condition, combined with either a performance or market condition. The performance condition is generally linked to one or more performance metrics of the Company, while the market condition is usually based on the achievement of specified stock price targets over a performance period determined by the Company, with the potential payout ranging from zero to 200% of the number of shares granted. For PSUs subject to a market condition, the fair value per award is fixed at the grant date and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of achievement of the market condition.

For PSUs granted during the period with a market condition, the Company determined the fair value on the date of grant by using a Monte Carlo simulation on the date of grant with the following assumptions:

Employee Stock Purchase Plans

In October 2022, the Company adopted the Xperi Inc. 2022 Employee Stock Purchase Plan (as amended in December 2023, the “2022 ESPP”). The 2022 ESPP provides an offering period of 12 months, commencing on each December 1 and June 1 during each period. Additionally, it includes a reset provision which is triggered if the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of any 12-month offering period. Upon occurrence of the reset, the existing offering period will automatically terminate and a new 12-month offering period will begin on the next business day.

As of March 31, 2026, there were 1.5 million shares reserved for future issuance under the 2022 ESPP.

Stock-Based Compensation

Total stock-based compensation expense for the three months ended March 31, 2026 and 2025 is as follows (in thousands):

Stock-based compensation expense categorized by award type for the three months ended March 31, 2026 and 2025 is summarized in the table below (in thousands):

As of March 31, 2026, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):

NOTE 11 – INCOME TAXES

For the three months ended March 31, 2026, the Company recorded an income tax expenseof $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 withholding taxes and foreign income taxes.

For the three months ended March 31, 2025, the Company 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.

As of March 31, 2026, gross unrecognized tax benefits of $15.5 million did not materially change as compared to December 31, 2025. Of the $15.5 million gross unrecognized tax benefits, $1.1 million would affect the effective tax rate, if recognized. The Company is unable to reasonably estimate the timing of the long-term payments or the amount by which the liability will increase or decrease.

It is the Company’s policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three months ended March 31, 2026 and 2025. As of March 31, 2026, accrued interest and penalties remained at $0.3 million as compared to December 31, 2025.

As of March 31, 2026, the Company’s 2021 through 2026 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.

NOTE 12 – LEASES

The Company leases office and research facilities, data centers and office equipment under operating leases with various expiration dates through 2032. Certain leases offer theop tion to renew and to terminate before the expiration date. Leases with an initial term of 12 months or less are not recognized on the balance sheets; expense for these leases is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred and are not considered when evaluating the operating lease right-of-use (“ROU”) assets and lease liabilities.

The Company subleases certain real estate to third parties. The sublease portfolio consists of operating leases for previously exited office space. Certain subleases include variable payments for operating costs. The subleases are generally co-terminus with the head lease, or shorter. Subleases generally do not include any residual value guarantees or restrictions or covenants imposed by the leases. Income from subleases is recognized as a reduction to selling, general and administrative expenses.

The components of operating lease costs were as follows (in thousands):

(1)

Includes short-term leases expensed on a straight-line basis.

The following table presents supplemental cash flow information arising from lease transactions (in thousands):

The weighted-average remaining term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:

Future minimum lease payments and related lease liabilities as of March 31, 2026 were as follows (in thousands):

(1) Future minimum lease payments exclude short-term leases as well as payments to landlords for variable common area maintenance, insurance, and real estate taxes.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Purchase and Other Contractual Obligations

In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements primarily include unconditional purchase obligations to service providers. As of March 31, 2026, the Company’s total future unconditional purchase obligations were approximately$108.8 million.

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes and amounts to certain of its licensees, customers, and business partners against claims made by third parties arising from the use of the Company's products, intellectual property, services or technologies. The Company cannot reasonably estimate the possible range of losses that may be incurred pursuant to its indemnification obligations, if any. Variables affecting any such assessment include, but are not limited to: the scope of the contractual indemnification obligation; the nature of the third party claim asserted; the relative merits of the third party claim; the financial ability of the third party claimant to engage in protracted litigation; the number of parties seeking indemnification; the nature and amount of damages claimed by the party suing the indemnified party; and the willingness of such party to engage in settlement negotiations. The Company has received requests for indemnification, but to date none has been material and no liability has been recorded in the Company’s financial statements.

As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company believes, given the absence of any such payments in the Company’s history, and the estimated low probability of such payments in the future, that the estimated fair value of these indemnification agreements is not material. In addition, the Company has directors’ and officers’ liability insurance coverage that is intended to reduce its financial exposure and may enable the Company to recover any payments under the indemnification agreements from its insurers, should they occur.

Contingencies

The Company and its subsidiaries have been involved in litigation matters and claims in the normal course of business. In the past, the Company or its subsidiaries have litigated to enforce their respective patents and other intellectual property rights, to enforce the terms of license agreements, to determine infringement or validity of intellectual property rights, and to defend themselves or their customers against claims of infringement or breach of contract. The Company expects it or its subsidiaries may be involved in similar legal proceedings in the future, including proceedings to ensure proper and full payment of royalties by licensees under the terms of their license agreements. Accruals for loss contingencies are recognized when a loss is probable, and the amount of such loss can be reasonably estimated.

An adverse decision in any legal actions could result in a loss of the Company’s proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company’s licensed technology or otherwise negatively impact the Company’s stock price or its business and consolidated financial results. Although considerable uncertainty exists, the Company does not anticipate that the disposition of any of these matters will have a material effect on its business or consolidated financial statements.

NOTE 14 - RESTRUCTURING

In November 2025, the Company approved a restructuring plan to improve cost efficiency and better align the operating structure with its long-term strategies and current market conditions. The plan involved reducing the Company’s global workforce by approximately 250 employees and impacted all business and functional areas.

As a result of the workforce reduction, the Company recognized restructuring charges totaling $13.9 million for the year ended December 31, 2025, primarily consisting of one-time employee termination benefits such as severance and related payroll taxes, post-termination medical benefits, and other related costs. The plan is expected to be substantially completed by the end of the first half of 2026.

The following table shows the amount of restructuring charges incurred and paid during the three months ended March 31, 2026 (in thousands):

NOTE 15 - SEGMENT RELATED INFORMATION

Xperi is a leading media and entertainment technology company and operates as asingle operating and reportable segment. The Company’s Chief Executive Officer has been determined to be the chief operating decision maker (“CODM”) in accordance with the authoritative guidance on segment reporting. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on net income (loss) that also is reported on the statements of operations as consolidated net income (loss). The measure of segment assets is reported on the balance sheet as total consolidated assets.

The following table presents information about reported segment revenue, significant segment expenses, and segment net loss for the three months ended March 31, 2026 and 2025 (in thousands):

(1)

Includes total salaries, bonuses, and employee benefits of $55.4 million and $68.5 million for the three months ended March 31, 2026 and 2025, respectively.