Xperi Ramps Up Focus on Media IP Business as Pay-TV Slide Continues
Xperi CEO Jon Kirchner highlighted the company’s media IP business on a Q2 earnings call Tuesday, calling it a top strategic growth area for its overall IP business as its pay-TV business declines along with industry trends. Revenue in that segment fell 9% year on year to $54 million due to subscriber churn, Kirchner said.
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IP licensing revenue in Q2 was $101.8 million, with media IP revenue up more than 40% year on year on a “step-up” in Xperi’s license with Comcast and other renewed and expanded over-the-top video licenses. The company also signed a long-term renewal of its patent license with Google covering its expanding businesses and a multiyear renewal with Fox. Agreements signed in Q2 show that innovations from Xperi's patent portfolio are “relevant across all forms of video consumption,” including linear, on-demand, online, mobile and pay-TV platforms, he said.
Though OTT services have lower average revenue per user than traditional pay TV, the scale of the overall OTT video market is much larger “as most consumers subscribe to multiple OTT services,” Kirchner said. Samir Armaly, president-IP licensing, cited a “pipeline of opportunities” in renewals and new licenses.
Xperi is also expanding the IP portfolio, after buying MobiTV assets in auction from the company’s Chapter 11 bankruptcy in June (see 2103010009). The MobiTV business is U.S.-centric and brings a managed service offering to TiVo with a client base of about 100 customers, Kirchner said. The quality and scalability potential of the platform combined with the existing IP TiVo customer base sets up Xperi to be a “key provider of services to this space,” said Kirchner. The MobiTV assets will help accelerate IPTV conversions and expand the addressable market within segments such as broadband and fiber-in-homes, he said. Post-close, Xperi signed agreements with nearly all MobiTV customers, he said.
Xperi reported revenue of $222.3 million for the quarter ended June 30. Results were higher than expected due to signing certain deals earlier than expected, but down 4.7% year on year due declines in pay TV and a $50 million decline in semiconductor IP, which dragged down overall IP revenue by 15%. The company is repositioning the semiconductor IP business for future growth, Kirchner said. The company maintained full-year revenue guidance of $860 million-$900 million.
Total product revenue was $120.4 million, up 6% year over year, due to growth in Connected Car and Consumer Experience, partially offset by declines in pay TV, Kirchner said. In the Consumer Experience segment, revenue grew 12% to $46.9 million due to TiVo Stream 4K device sales and a "significant renewal” on the audio side for TVs, sound bars and AV receivers, Kirchner said. The number of activated TiVo Stream 4Ks grew from Q1 due to broader retail presence and “creative marketing.” In addition to Amazon and Walmart, the Stream 4K is also now selling at Best Buy, Target and QVC.
The connected car media platform, DTS AutoStage, is live in 42 countries, Kirchner said, and the company is engaged with 20 OEMs, “exploring launches” in 2022-2025 with Tier 1s in Asia, Europe and the U.S. The DTS AutoSense in-cabin monitoring platform is due to launch this summer globally with BMW. The company is in discussions with 14 OEMs about launches in 2023-26.