Xperi Corporation (Nasdaq: XPER) (the “Company” or “we”) today announced
financial results for the first quarter ended March 31, 2019.
“We are pleased with our financial results and the progress we made
during the quarter on several key initiatives in the automotive, mobile
and home markets. Billings were in line with our expectations and
operating expenses were lower than forecasted, generating strong
financial performance for the quarter,” said Jon Kirchner, chief
executive officer of Xperi.
|
Financial Highlights |
||||||||||||||||
|
($ and share count in thousands) |
||||||||||||||||
| GAAP | Non-GAAP | |||||||||||||||
| Q1 2019 | Q1 2018 | Q1 2019 | Q1 2018 | |||||||||||||
| Billings 1 | $ | 104,302 | $ | 104,268 | $ | 104,302 | $ | 104,268 | ||||||||
| Total Operating Expense 2 | $ | 86,564 | $ | 98,023 | $ | 53,482 | $ | 61,969 | ||||||||
| Interest Expense 1 | $ | 6,685 | $ | 6,318 | $ | 6,685 | $ | 6,318 | ||||||||
| Other Income / (Expense) 2 | $ | 2,302 | $ | 3,154 | $ | 846 | $ | 1,003 | ||||||||
| Cash Tax (net of refunds) 1 | $ | 5,599 | $ | 3,963 | $ | 5,599 | $ | 3,963 | ||||||||
| Diluted Shares Outstanding | 48,721 | 49,302 | 51,199 | 52,088 | ||||||||||||
| 1 | Measures are the same for both the GAAP and Non-GAAP presentation. | |
| 2 | See tables for reconciliations. | |
| Other Relevant Metrics | Q1 2019 | Q1 2018 | ||||||
| Operating Cash Flow | $ | 13,821 | $ | 4,650 | ||||
| Cash, Cash Equivalents and S-T Investments | $ | 107,489 | $ | 80,790 | ||||
Capital Allocation
On March 27, 2019, the Company paid $9.8 million to stockholders of
record on March 13, 2019, for the quarterly cash dividend of $0.20 per
share of common stock.
Additionally, on May 2, 2019, the Board of Directors approved the
quarterly dividend of $0.20 per share of common stock, payable on June
19, 2019, to stockholders of record on May 29, 2019.
In March, the Company paid down $50 million of its Term Loan B resulting
in a remaining balance of $444 million.
Financial Guidance
Consequent with the introduction of the revenue accounting standard, ASC
606, the Company announced it will use billings as a key measure of
business progress. As a result, the Company’s outlook is now based on
billings rather than GAAP revenue. For additional information regarding
the Company’s approach to guidance, please review the “ASC 606 Business
Metrics and Guidance Approach” presentation given by the Company on
January 25, 2018, at https://investor.xperi.com.
|
Q2 2019 |
GAAP Outlook |
Non-GAAP Outlook |
||||
| Billings 1 | $88M to 92M | $88M to 92M | ||||
| Operating Expense 2 | $84M to 87M | $51M to 54M | ||||
| Interest Expense 1 | $6.2M | $6.2M | ||||
| Other Income / (Expense) 2 | $2.3M | $0.5M | ||||
| Cash Tax (net of refunds) 1 | $1.1M | $1.1M | ||||
| Diluted Shares Outstanding | 49.2M | 52.1M |
| 1 | Measures are the same for both the GAAP and Non-GAAP presentation. | |
| 2 | See tables for reconciliations. | |
The Company reiterated its 2019 full year billings and expense outlook
and has provided an update on expected payments of cash taxes:
|
FY 2019 |
GAAP Outlook |
Non-GAAP Outlook |
||||
| Billings 1 | $395M to 415M | $395M to 415M | ||||
| Operating Expense 2 | $357M to 372M | $225M to 240M | ||||
| Interest Expense 1 | ~$26M | ~$26M | ||||
| Other Income / (Expense) 2 | ~$8.7M | ~$1.5M | ||||
| Cash Tax (net of refunds) 1 | $18.5M to 22.5M | $18.5M to 22.5M | ||||
| Diluted Shares Outstanding | 50.0M | 52.0M | ||||
| Operating Cash Flow 1 | $120M to 140M | $120M to 140M |
| 1 | Measures are the same for both the GAAP and Non-GAAP presentation. | |
| 2 | See tables for reconciliations. | |
Conference Call Information
The Company will hold its first quarter 2019 earnings conference call at
2:00 PM Pacific Time (5:00 PM Eastern Time) on Wednesday, May 8, 2019.
To access the call in the U.S., please dial 1-800-667-5617, and for
international callers dial +1 334-323-0509, approximately 15 minutes
prior to the start of the conference call. The conference ID is 8906608.
The conference call will also be broadcast live over the Internet at https://investor.xperi.com.
Safe Harbor Statement
This press release contains forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve risks
and uncertainties that could cause actual results to differ
significantly from those projected, particularly with respect to the
Company’s financial results and guidance. Material factors that may
cause results to differ from the statements made include the plans or
operations relating to the businesses of the Company; market or industry
conditions; changes in patent laws, regulation or enforcement, or other
factors that might affect the Company’s ability to protect or realize
the value of its intellectual property; the expiration of license
agreements and the cessation of related royalty income; the failure,
inability or refusal of licensees to pay royalties; initiation, delays,
setbacks or losses relating to the Company’s intellectual property or
intellectual property litigations, or invalidation or limitation of key
patents; fluctuations in operating results due to the timing of new
license agreements and royalties, or due to legal costs; the risk of a
decline in demand for semiconductors and products utilizing our audio
and imaging technologies; failure by the industry to use technologies
covered by the Company’s patents; the expiration of the Company’s
patents; the Company’s ability to successfully complete and integrate
acquisitions of businesses; the risk of loss of, or decreases in
production orders from, customers of acquired businesses; financial and
regulatory risks associated with the international nature of the
Company’s businesses; failure of the Company’s products to achieve
technological feasibility or profitability; failure to successfully
commercialize the Company’s products; changes in demand for the products
of the Company’s customers; limited opportunities to license
technologies due to high concentration in applicable markets for such
technologies; the impact of competing technologies on the demand for the
Company’s technologies; pricing trends, including the Company’s ability
to achieve economies of scale; and other developments in the markets in
which the Company operates, as well as management’s response to any of
the aforementioned factors. You are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the
date of this release.
The foregoing review of important factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary
statements that are included herein and elsewhere, including the Risk
Factors included in the Company’s recent reports on Form 10-K and Form
10-Q and other documents of the Company on file with the Securities and
Exchange Commission (the “SEC”). The Company’s SEC filings are available
publicly on the SEC’s website at www.sec.gov.
Any forward-looking statements made or incorporated by reference herein
are qualified in their entirety by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially
realized, that they will have the expected consequences to, or effects
on, the Company or its business or operations. Except to the extent
required by applicable law, the Company undertakes no obligation to
update publicly or revise any forward-looking statement, whether as a
result of new information, future developments or otherwise.
About Xperi Corporation
Xperi Corporation (Nasdaq: XPER) and its brands, DTS, FotoNation, HD
Radio, Invensas and Tessera, are dedicated to creating innovative
technology solutions that enable extraordinary experiences for people
around the world. Xperi’s solutions are licensed by hundreds of leading
global partners and have shipped in billions of products in areas
including premium audio, broadcast, automotive, computational imaging,
computer vision, mobile computing and communications, memory, data
storage, and 3D semiconductor interconnect and packaging. For more
information, please call +1 408-321-6000 or visit www.xperi.com.
Xperi, DTS, Invensas, FotoNation, HD Radio, Tessera and their respective
logos are trademarks or registered trademarks of affiliated companies of
Xperi Corporation in the United States and other countries. All other
company, brand and product names may be trademarks or registered
trademarks of their respective companies.
Billings
Billings reflect amounts in an accounting period invoiced to customers,
less any credits issued to or paid to customers, plus amounts due under
certain licensing-related contractual arrangements that may not be
subject to an invoice. Management evaluates the Company’s financial
performance in part based on billings due to the close alignment between
billings and cash receipts from licensing activity, and believes
billings is an important metric to provide to readers of our financial
results. Billings may vary materially from revenue recorded under U.S.
GAAP.
Non-GAAP Financial Measures
In addition to disclosing financial results calculated in accordance
with U.S. Generally Accepted Accounting Principles (GAAP), the Company’s
earnings release contains non-GAAP financial measures adjusted for
either one-time or ongoing non-cash acquired intangibles amortization
charges, acquired in-process research and development, all forms of
stock-based compensation, interest income from significant financing
components under Topic 606, unrealized gains or losses on marketable
equity securities, restructuring and other related exit costs.
Management believes that the non-GAAP measures used in this release
provide investors with important perspectives into the Company’s ongoing
business performance. The non-GAAP financial measures disclosed by the
Company should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the Company may be calculated differently
from, and therefore may not be comparable to, similarly titled measures
used by other companies. All financial data is presented on a GAAP basis
except where the Company indicates its presentation is on a non-GAAP
basis.
Set forth below are reconciliations of the Company’s reported GAAP to
non-GAAP financial metrics.
– Tables Follow –
XPER-E
| XPERI CORPORATION | ||||||||
| FINANCIAL INFORMATION SCHEDULE | ||||||||
| COMPONENTS OF GAAP AND NON-GAAP OPERATING EXPENSE | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| GAAP operating expense – components | ||||||||
| Cost of revenue | $ | 2,207 | $ | 2,324 | ||||
| Research, development and other related costs | 27,039 | 26,515 | ||||||
| Selling, general and administrative | 30,569 | 34,702 | ||||||
| Amortization expense | 25,459 | 27,166 | ||||||
| Litigation expense | 1,290 | 7,316 | ||||||
| Total operating expenses | $ | 86,564 | $ | 98,023 | ||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Non-GAAP operating expense – components | ||||||||
| Cost of revenue | $ | 2,207 | $ | 2,324 | ||||
| Research, development and other related costs | 23,436 | 23,380 | ||||||
| Selling, general and administrative | 26,549 | 28,949 | ||||||
| Litigation expense | 1,290 | 7,316 | ||||||
| Total operating expenses | $ | 53,482 | $ | 61,969 | ||||
| XPERI CORPORATION | ||||||||
| RECONCILIATION FROM GAAP TO NON-GAAP OPERATING EXPENSES | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| GAAP operating expenses | $ | 86,564 | $ | 98,023 | ||||
| Adjustments to non-GAAP operating expenses: | ||||||||
| Stock-based compensation –R&D | (3,603 | ) | (3,094 | ) | ||||
| Stock-based compensation –SG&A | (4,020 | ) | (4,314 | ) | ||||
| Amortization expense | (25,459 | ) | (27,166 | ) | ||||
| Acquisition & related expense–R&D | — | (41 | ) | |||||
| Acquisition & related expense–SG&A | — | (1,439 | ) | |||||
| Non-GAAP operating expenses | $ | 53,482 | $ | 61,969 | ||||
| XPERI CORPORATION | ||||||||
| RECONCILIATION FROM GAAP TO NON-GAAP OTHER INCOME/(EXPENSE) | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| GAAP other income/(expense) | $ | 2,302 | $ | 3,154 | ||||
| Adjustments to non-GAAP other income/(expense): | ||||||||
| Interest income from significant financing components under Topic 606 | (1,866 | ) | (2,151 | ) | ||||
| Unrealized loss on marketable equity securities | 410 | — | ||||||
| Non-GAAP other income/(expense) | $ | 846 | $ | 1,003 | ||||
| XPERI CORPORATION | ||||||||||||||||
| RECONCILIATION FOR GUIDANCE ON | ||||||||||||||||
| GAAP TO NON-GAAP OPERATING EXPENSE | ||||||||||||||||
| (in millions) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||
| June 30, 2019 | December 31, 2019 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| GAAP expense | $ | 84.0 | $ | 87.0 | $ | 357.0 | $ | 372.0 | ||||||||
| Stock-based compensation–R&D | (3.4 | ) | (3.4 | ) | (13.5 | ) | (13.5 | ) | ||||||||
| Stock-based compensation–SG&A | (4.3 | ) | (4.3 | ) | (17.5 | ) | (17.5 | ) | ||||||||
| Amortization expense | (25.3 | ) | (25.3 | ) | (101.0 | ) | (101.0 | ) | ||||||||
| Total of non-GAAP adjustments | (33.0 | ) | (33.0 | ) | (132.0 | ) | (132.0 | ) | ||||||||
| Non-GAAP expense | $ | 51.0 | $ | 54.0 | $ | 225.0 | $ | 240.0 | ||||||||
| XPERI CORPORATION | ||||||||
| RECONCILIATION FOR GUIDANCE ON | ||||||||
| GAAP TO NON-GAAP OTHER INCOME/(EXPENSE) | ||||||||
| (in millions) | ||||||||
| (unaudited) | ||||||||
| Three months ended | Twelve months ended | |||||||
| June 30, 2019 | December 31, 2019 | |||||||
| GAAP other income/(expense) | $ | 2.3 | $ | 8.7 | ||||
| Adjustments to non-GAAP other income/(expense): | ||||||||
| Interest income from significant financing components under Topic 606 | (1.8 | ) | (7.2 | ) | ||||
| Non-GAAP other income/(expense) | $ | 0.5 | $ | 1.5 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190508005768/en/