Thank you for standing by. Welcome to the Xperi Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. Sam, please go ahead.

Good afternoon, and thank you for joining us as Xperi reports its third quarter 2025 financial results. With me on today's call are Jon Kirchner, our Chief Executive Officer; and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there is an earnings presentation on our Investor Relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections or other statements about future events, which are based on management's current expectations and beliefs and therefore, subject to risks, uncertainties and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discuss today, please refer to the Risk Factors and MD&A sections in our SEC filings, including our most recent Form 10-K for the year ended December 31, 2024, and our Form 10-Q for the quarter ended September 30, 2025, to be filed with the SEC. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to their most directly comparable GAAP measures, which can be found in the Investor Relations section of our website. And last, a replay of this conference call will be available on our website shortly after the conclusion of this call. Now I'll turn the call over to Xperi's CEO, Jon Kirchner.

Thank you, Sam, and thank you, everyone, for joining us on our third quarter 2025 earnings call. For those new to our story, we're still learning about our business, I'll start this call with a brief overview of the company and our long-term goals. Xperi is a global software and services company that delivers products through our well-known brands, including TiVo, DTS and HD Radio. Our established and profitable core businesses, which include HD Radio, the digital radio standard in the United States, Pay TV program guides and audio licensing solutions in home and automotive have enabled us to build a strategic, connected and synergistic platform for media monetization. We believe media monetization represents a large and attractive market opportunity. And after investment over the past several years, our growth strategies as an independent media platform are reaching an inflection point. To put that in perspective, it's important to recognize the progress we've made against the ambitious strategic goals we outlined a few years ago. Today, we have either accomplished or are on a path to realize each of our strategic goals, which collectively represent a pivot for our business and creates a platform that has significant potential to grow and create long-term value. Now let me provide an overview of the progress we made during the quarter against this year's goals, progress that continues to give us confidence that we are reaching a key inflection point as a business. For media platform footprint, our most critical growth area, we are extremely pleased with the ongoing partner rollout of our TiVo One CTV advertising platform into the U.S. and European markets. We achieved 30% sequential growth to finish with 4.8 million monthly active users at quarter end. The continued growth of our footprint is instrumental for us to reach larger…

Thanks, Jon. I will start by reviewing the revenue results for the quarter. When excluding the impact of the Perceive divestiture, overall revenue was lower by $20 million compared to last year as expected due to a large multiyear minimum guarantee agreement with Panasonic recorded in the prior year period. Looking at each of our primary markets, Pay TV was lower than last year by $32 million or 39% due primarily to last year's Panasonic agreement. Excluding all minimum guarantee agreements from the prior year period, Pay TV would have decreased on a percentage basis in the high single digits, consistent with the overall market. For IPTV, revenue grew approximately $4 million or 18% as subscribers continue to grow at a brisk pace, particularly in Latin America. For the consumer electronics market, excluding the impact of the Perceive divestiture, revenue grew by $3 million or 20% due to a higher level of new agreements this year, along with higher revenue on a per unit basis from audio technologies and game consoles. In Connected Car, revenue was up by $9 million or 36% due to a higher level of long-term arrangements in this year's number, including the significant Asia-based program that Jon mentioned earlier. Revenue in media platform was approximately flat on a year-over-year basis. Turning to the income statement. Our year-over-year revenue increased by approximately $2 million, driven by higher costs related to long-term arrangements recorded in the quarter. Non-GAAP adjusted operating expense decreased by $16 million or approximately 20% primarily due to reduced personnel expense as a result of our ongoing business transformation efforts and also from last year's divestiture of Perceive at the beginning of the fourth quarter. Our adjusted EBITDA was $23 million, a 21% adjusted EBITDA margin, down from last year's $31 million as our expense…

[Operator Instructions] Your first question comes from the line of Matthew Galinko with Maxim Group.

Can you maybe touch on the pieces that drive the initially lower gross margin in the media platform business that scales. And sort of how long do you expect to kind of operate at a lower margin before you reach kind of your terminal or a mature margin?

Well, I think there's a couple of things going on. There is a semi-fixed cost of operating a platform as you start to grow that business. And so that will hit things harder initially. But as you build scale, your marginal advertising dollars will obviously come through at higher margin. There are also various deals that we have done pretty customarily that help us ensure there's plenty of content on the platform and whatnot and other market, what I'll call market incentives that as revenue starts to emerge within that business, some of those costs will be recognized. So I think it's elements like that, but we have a very strong belief that over time, as you certainly build significantly more revenue scale that you should -- you will see margin acceleration in that business.

Got it. And I guess as a follow-up, as you begin to deliver targeted ads to automotive, do you expect a similar kind of individual fixed cost basis that you need to clear before contributing at a higher margin level? Or is that kind of all amortized through the same fixed costs as you do kind of on the traditional side?

I mean some of -- I would say it's more of the latter. It's kind of part and parcel to the platform we've been working on for some time. And I think the way to think about the opportunity there is that we are unlocking a level of measurement that currently does not exist in radio broadcast. And the interest around being able to run targeting and measurement in that space is very high. It's obviously a sizable business and has been for a long time. But what we've been able to do now is we've finished some of the platform development work, and we've also seen the scale get to the point where we can offer, I think, a very compelling solution to various partners, whether it be for data or for advertising, I think we are -- and this was part of the -- I think we're turning the corner into a really interesting next chapter as we look ahead over the next 12 to 24 months. And this is something that we've been working towards for some time, part of the broader vision, but it is great to see it coming together.

And the next question comes from the line of Steve Frankel with Rosenblatt.

Jon, congratulations on the progress and starting to scale the business. And maybe help me with a couple of numbers for starters, I appreciate the TiVo MAU progress, but maybe tell us where that was last year in the third and fourth quarters so we can gauge it going forward.

That's a good question. I don't have that exact number off the top of my head. Is your question from a geographic standpoint, Steve, or total MAUs.

Total MAUs.

Much, much smaller. It has grown significantly. So in the low millions.

Very low millions.

And what was -- you know what ARPU was last quarter. So the $875 million compares to what was the most recent data point that you gave out on that.

It's not one we have at our fingertips here, but I think it's fair to say that it would be probably pretty similar number. It just -- this happens when you do a 12-month look back when you're calculating the average revenue per user and your denominator actually ends up being pretty small. So we're looking at all of our monetization revenue as a business from both TiVo One and from other parts of our business.

And I think the expectation, Steve, is that as you start to see more monetization happening, particularly as you look into '26 and beyond, you'll start to see that number move northward. Although, as we said, it won't necessarily be linear because there's 2 things going on in that calculation, the speed or the speed at which stuff is coming online in any given quarter relative to various monetization-related deals you may be doing in any particular given quarter.

Okay. Let me take a different tack then. TiVo One is scaling up nicely. What is the critical mass you need to have meaningful ad revenue generated on that platform? Are we halfway there?

Let me kind of answer, I think, the bigger question, and then I'll maybe come back to another one. The answer is we expect to see material progress on the platform we have and based on the visibility that we have into '26 footprint growth, we expect that to occur in '26. So we feel very good about that. The question of how much do you need to have, generally speaking, scale is important to advertisers and the scale number is kind of different based on markets. So it's different for the U.K. than it is for Germany or the U.S. for that matter. But that -- but one of the things that we are doing very proactively to address the fact that in places where scale may not fully exist immediately or even in the near term where people, let's call it, some advertisers might ideally want it, that is pursuing partnerships where people can bring other footprint in conjunction with our inventory and successfully sell it. And I think, as we've said, we've announced a number of partnerships that I think do 2 things. It helps provide some of that scale, obviously, helps get our inventory into various selling pipelines without having to take lots of extra time to build out those pipelines as well from an ad sales perspective. But I think more than anything, it speaks to the fact that there is real interest in the industry in our inventory and footprint. And as these partners who obviously deal in this space and have for some time are keen to engage with us to enter those partnerships and take it forward in conjunction with us. So we're not outsourcing everything we're doing on the platform. It's we're finding strategic partners in different ways and places so that we can augment and accelerate the revenue growth efforts.

Okay. And then it seems very exciting that you're making progress with AutoStage and early discussions around monetizing that. Do you think that revenue becomes material kind of exiting 2026? Or we ought to think about 2027 when that platform is a monetization machine.

I think the trial, Steve, will play out through '26, and I certainly expect to see revenue off the platform in '26, but I think it's going to be more material in '27.

And the next question comes from the line of Hamed Khorsand with BWS Financial.

Could you just talk a little bit more about these minimum guarantees and how it's becoming -- you're saying it's going to be more than 20% of 2025 revenue. Is that because of the competitive necessity that you have to provide such deals?

I think there's multiple things going on, Hamed, and I think Robert touched on some of them in the script. You've got partners, in many cases, interested in trying to have very clear kind of windows on how they think about what their -- what technology they're including in their platforms. They obviously manage their supply chains also, in some cases, looking for greater certainty and not having to deal with potential renegotiations. And on the flip side, we are in a similar place where we look out, and there's certainly some uncertainty in the market in these spaces. And to the extent that we can lock in our technology into various platforms for longer periods of time, lowers our service cost, gives us greater predictability. And I think the key point about them is that they're not one and done. They're just -- it's kind of -- it's a slightly different, more committed structure to our technology and our solutions -- the only thing that's different about it is the accounting standards require you to recognize the revenue a little bit differently than you would on a pure as-you-go type licensing reporting basis. So I think there's clear benefits on both sides and obviously, visibility on both sides being one of the key ones.

Was minimum guarantee a reason why the Connected Car revenue jumped this quarter?

Yes. We had a higher level of minimum guarantees this quarter than we had last year.

Okay. And my last question is, when would you see platform revenue stabilize? It seems like it's quite volatile quarter-over-quarter.

Can you define what you mean by platform?

Well, the media platform, sorry. The media revenue, yes.

Yes, I think as you start to see meaningful growth in '26, you'll see less volatility, which has to do with some of the existing, what I'll call, underlying parts of that number. So it will take on more stability over time as the number grows.

I think if I can add on there, given that we recognize our advertising and as we synonymously call it, monetization in media platform for the TiVo One growth that -- we expect that to be a grower next year and going forward.

And we have no further questions at this time. I would like to turn it back to Jon Kirchner for closing remarks.

Thanks, operator. We're pleased with the meaningful progress we've made in achieving nearly all of our 2025 strategic goals ahead of schedule. I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. We look forward to sharing further updates on our year-end call. Thanks, everyone, for joining us today.

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.