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Equity Bottom-Up

<ul>
<li>XPER is setting the course for revenue growth after reporting fourth quarter 2021 results. Aiding the process to revenue growth is an increase in baseline IP license revenue for 2022</li>
<li>XPER disclosed it has signed a hybrid bonding IP licensing agreement with Micron Technologies (MU)</li>
<li>XPER is broadening its presence in the automobile space. During the fourth quarter earnings call, XPER disclosed Toyota Motor (TM) will include HDRadio in all its car models</li>
</ul>


XPER is setting the course for revenue growth after reporting fourth quarter 2021 results. Aiding the process to revenue growth is an increase in baseline IP license revenue for 2022
XPER disclosed it has signed a hybrid bonding IP licensing agreement with Micron Technologies (MU)
XPER is broadening its presence in the automobile space. During the fourth quarter earnings call, XPER disclosed Toyota Motor (TM) will include HDRadio in all its car models


<ul>
<li>XPER starts 2022 with a baseline free cash flow that is receiving little investor attention after the Company spent 2021 investing in its product offering</li>
<li>XPER has multiple shots to achieve greater free cash flow in 2022. From AutoStage and AutoSense to hybrid bonding and content streaming intellectual property</li>
<li>The steps XPER took in 2021 did not achieve triumphant revenue and free cash flow events to garner investor attention in the same year, but sets up 2022 for growth</li>
</ul>


XPER starts 2022 with a baseline free cash flow that is receiving little investor attention after the Company spent 2021 investing in its product offering
XPER has multiple shots to achieve greater free cash flow in 2022. From AutoStage and AutoSense to hybrid bonding and content streaming intellectual property
The steps XPER took in 2021 did not achieve triumphant revenue and free cash flow events to garner investor attention in the same year, but sets up 2022 for growth


XPER: Multiple Shots on Goal, Upgrading to Top Pick

<ul type="disc"><li>
Xperi (XPER) managed its expenses in the third quarter while getting ready for broader deployment of its DTS AutoStage and DTS AutoSense solutions. The lower operating expenses resulted in XPER’s earnings exceeding our forecasts.</li></ul> <ul type="disc"><li>XPER’s high-margin business model can be hampered by higher spending, especially as the Company invests in splitting the business into two separate entities. The brakes on spending came during a period when XPER is not immune to the global supply chain bottlenecks.</li></ul> <ul type="disc"><li>In prior years the third quarter was seasonally a lower period for TiVo. COVID-19 might have played a role in hiding such seasonality in last year’s performance, and it was only compounded this year due to global supply chain bottlenecks.</li></ul> <ul type="disc"><li>XPER’s stock continues to discount the free cash flow capabilities of the business. XPER’s free cash flow should increase next year with the new announced design wins, which is also not depicted in the stock price trading below our target of $26.</li></ul>


Xperi (XPER) managed its expenses in the third quarter while getting ready for broader deployment of its DTS AutoStage and DTS AutoSense solutions. The lower operating expenses resulted in XPER’s earnings exceeding our forecasts. XPER’s high-margin business model can be hampered by higher spending, especially as the Company invests in splitting the business into two separate entities. The brakes on spending came during a period when XPER is not immune to the global supply chain bottlenecks. In prior years the third quarter was seasonally a lower period for TiVo. COVID-19 might have played a role in hiding such seasonality in last year’s performance, and it was only compounded this year due to global supply chain bottlenecks. XPER’s stock continues to discount the free cash flow capabilities of the business. XPER’s free cash flow should increase next year with the new announced design wins, which is also not depicted in the stock price trading below our target of $26.

<ul type="disc"><li>
Xperi (XPER) was successful in signing license agreements earlier than expected resulting in second quarter results beating our forecasts. XPER highlighted its biggest licensing wins during the quarterly call. We had referenced the YouTube TV license renewal in early July.</li></ul> <ul type="disc"><li>XPER has more over the top (“OTT”) licenses coming up for renewal and management asserted there are many more new OTT participants XPER is targeting. OTT is a larger revenue opportunity now with consumers signed up on multiple services.</li></ul> <ul type="disc"><li>XPER disclosed it is engaged with 20 automobile OEMs for its DTS AutoStage product and 14 OEMs for its DTS AutoSense product.</li></ul> <ul type="disc"><li>The expanded availability of TiVo Stream 4K at multiple retailers in the second quarter is resulting in greater number of units sold. The Company also undertook aggressive pricing promotion in the second quarter to push more devices into the market.</li></ul>


Xperi (XPER) was successful in signing license agreements earlier than expected resulting in second quarter results beating our forecasts. XPER highlighted its biggest licensing wins during the quarterly call. We had referenced the YouTube TV license renewal in early July. XPER has more over the top (“OTT”) licenses coming up for renewal and management asserted there are many more new OTT participants XPER is targeting. OTT is a larger revenue opportunity now with consumers signed up on multiple services. XPER disclosed it is engaged with 20 automobile OEMs for its DTS AutoStage product and 14 OEMs for its DTS AutoSense product. The expanded availability of TiVo Stream 4K at multiple retailers in the second quarter is resulting in greater number of units sold. The Company also undertook aggressive pricing promotion in the second quarter to push more devices into the market.

<ul type="disc"><li>
Xperi (XPER) announced the renewal of its license agreement with Alphabet (GOOGL) for XPER’s entire patent portfolio. This is the first over the top (“OTT”) license renewal since XPER and TiVo merged. It marks a change in the business model and to how TiVo used to charge OTT operators.</li></ul> <ul type="disc"><li>We have been highlighting the forthcoming change in revenue structure from this segment of XPER’s business for several quarters. The GOOGL news is not enough to move the needle on a standalone basis, but it does describe how the patent license business is changing and could still grow when pay TV operators are experiencing a decline in subscribers.</li></ul> <ul type="disc"><li>The license with GOOGL was the first to renew, but there are a handful more that should come up for renewal soon.</li></ul> <ul type="disc"><li>We have updated our earnings model to include the benefits and impact from the MobiTV acquisition completed in the second quarter.</li></ul>


Xperi (XPER) announced the renewal of its license agreement with Alphabet (GOOGL) for XPER’s entire patent portfolio. This is the first over the top (“OTT”) license renewal since XPER and TiVo merged. It marks a change in the business model and to how TiVo used to charge OTT operators. We have been highlighting the forthcoming change in revenue structure from this segment of XPER’s business for several quarters. The GOOGL news is not enough to move the needle on a standalone basis, but it does describe how the patent license business is changing and could still grow when pay TV operators are experiencing a decline in subscribers. The license with GOOGL was the first to renew, but there are a handful more that should come up for renewal soon. We have updated our earnings model to include the benefits and impact from the MobiTV acquisition completed in the second quarter.

United States

Xperi Holding Corp creates, develops, and licenses audio, computational imaging, computer vision and semiconductor packaging and interconnect technologies. The Company offers its products and solutions to mobile, home, datacenter, and automotive industries.

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