What changed in this filing

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Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 234 added, 492 removed, 629 unchanged (54% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Licensing, services and software

Total revenue

Operating expenses:

Cost of licensing, services and software revenue, excluding depreciation and amortization of intangible assets

Cost of hardware revenue, excluding depreciation and amortization of intangible assets

Cost of revenue, excluding depreciation and amortization of intangible assets

Research, development and other related costs

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Total operating expenses

Operating income (loss)

Operating income

Interest expense

Other income and expense, net

Loss on debt extinguishment

Loss before taxes

Other income (expense), net

Income before taxes

Provision for (benefit from) income taxes

net loss attributable to noncontrolling interest

Net loss attributable to the Company

Loss per share attributable to the Company:

Net income attributable to the Company

Income per share attributable to the Company:

Weighted average number of shares used in per share

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XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Change in foreign currency translation adjustment

Net unrealized gain (loss) on available-for-sale

Net unrealized loss on available-for-sale

debt securities

Other comprehensive income (loss), net of tax

Comprehensive loss

Other comprehensive loss, net of tax

Comprehensive income

comprehensive loss attributable to noncontrolling interest

Comprehensive loss attributable to the Company

Comprehensive income attributable to the Company

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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(in thousands, except for par value)

September 30,

Current assets:

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Accounts receivable, net of allowance for credit losses of $ 2,895 and $ 3,012 , respectively

Unbilled contracts receivable, net of allowance for credit losses of $ 2,564 and $ 2,231 , respectively

Unbilled contracts receivable, net

Other current assets

8 unchanged sentences

Accounts payable

Accrued legal fees

Accrued liabilities

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10,200 shares)

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Retained earnings

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(in thousands)

Nine Months Ended

September 30, 2021

September 30, 2020

Three Months Ended

March 31, 2022

March 31, 2021

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash from operating activities:

Adjustments to reconcile net income to net cash from operating activities:

Depreciation of property and equipment

2 unchanged sentences

Deferred income taxes

Loss on debt extinguishment

Patent assets received in lieu of cash

Changes in operating assets and liabilities:

8 unchanged sentences

Proceeds from sale of property and equipment

Net cash received (paid) for mergers and acquisitions

Purchases of intangible assets

6 unchanged sentences

Repayment of debt

Debt refinancing costs

Proceeds from debt, net of debt discount and issuance costs

Repayment of assumed debt from merger transaction

Proceeds from employee stock purchase program and exercise of stock options

8 unchanged sentences

Income taxes paid, net of refunds

Stock issued in merger transaction

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

Total Company Stockholders' Equity

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Treasury Stock

1 unchanged sentence

Noncontrolling

Income (Loss)

Balance at July 1, 2021

Balance at January 1, 2022

Issuance of subsidiary shares to noncontrolling interest

Net income (loss)

Other comprehensive loss

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Repurchases of common stock, shares exchanged

Shares exchanged and returned to assumed plans

Repurchases of common stock

Stock-based compensation expense

Balance at September 30, 2021

Balance at March 31, 2022

Total Company Stockholders' Equity

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2021

Treasury Stock

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Issuance of subsidiary shares to noncontrolling interest

Net income (loss)

Other comprehensive loss

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Stock-based compensation expense

Balance at September 30, 2021

XPERI HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (continued)

(in thousands)

Total Company Stockholders' Equity

Three Months Ended September 30, 2020

Treasury Stock

Comprehensive

Noncontrolling

Balance at July 1, 2020

Issuance of subsidiary shares to noncontrolling interest

Other comprehensive income

Cash dividends paid on common stock ($ 0.05 per share)

Issuance of restricted stock, net of shares canceled

Repurchases of common stock, shares exchanged

Repurchases of common stock

Stock-based compensation expense

Balance at September 30, 2020

Total Company Stockholders' Equity

Nine Months Ended September 30, 2020

Treasury Stock

Comprehensive

Noncontrolling

Income (Loss)

Balance at January 1, 2020

Issuance of subsidiary shares to noncontrolling interest

Other comprehensive income

Cash dividends paid on common stock ($ 0.45 per share)

Issuance of common stock in connection with employee stock purchase plan

Issuance of restricted stock, net of shares canceled

Repurchases of common stock, shares exchanged

Repurchases of common stock

Common stock issued in merger transaction

Retirement of treasury stock

Stock-based compensation expense

Balance at September 30, 2020

Balance at March 31, 2021

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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On June 2, 2020, Xperi Holding Corporation’s common stock, par value $ 0.001 per share, commenced trading on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “XPER.”

Xperi was determined to be the accounting acquirer in the Mergers.

As a result, the historical financial statements of Xperi for periods prior to the Mergers are considered to be the historical financial statements of Xperi Holding Corporation.

As used herein, the “Company” refers to Xperi when referring to periods prior to June 1, 2020 and to Xperi Holding Corporation when referring to periods subsequent to June 1, 2020.

The Company’s results of operations include the operations of TiVo after June 1, 2020, and TiVo’s assets and liabilities were recorded at their estimated fair values in the Company’s Condensed Consolidated Balance Sheets as of June 1, 2020 .

Xperi Holding Corporation is a leading consumer and entertainment product/solutions licensing company and one of the industry’s largest intellectual property (IP) licensing platforms, with a diverse portfolio of media and semiconductor intellectual property and more than 11,000 patents and patent applications worldwide.

The Company invents, develops, and delivers technologies that enable extraordinary experiences.

The Company’s technologies, delivered via its brands (DTS, HD Radio, IMAX Enhanced, Invensas, and TiVo), and by its subsidiary, Perceive Corporation, make entertainment more entertaining, and smart devices smarter.

The Company’s technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for customers, partners and consumers.

The Company shapes how millions of consumers access and experience entertainment content, and the Company’s innovations are found in billions of devices and hundreds of millions of interfaces around the globe.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

Xperi Holding Corporation is a leading consumer and entertainment product/solutions licensing company and one of the industry’s largest intellectual property licensing platforms, with a diverse portfolio of media and semiconductor intellectual property and more than 11,000 patents and patent applications worldwide.

The Company creates extraordinary experiences at home and on the go for millions of consumers around the world, elevating content and how audiences connect with it in a way that is more intelligent, immersive and personal.

Powering smart devices, connected cars, entertainment experiences and more, the Company has created a unified ecosystem that reaches highly engaged consumers, uncovering significant new business opportunities, now and in the future.

The Company’s technologies are integrated into billions of consumer devices, media platforms, and semiconductors worldwide, driving increased value for partners, customers and consumers.

The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

The amounts as of December 31, 2021 have been derived from the Company’s annual audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 24, 2022 (the “Form 10-K”).

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These financial statements should be read in conjunction with the annual audited financial statements and notes thereto as of and for the year ended December 31, 2021, included in the Form 10-K.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any future period and the Company makes no representations related thereto.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022 or any future period and the Company makes no representations related thereto.

In the fourth quarter of 2018, the Company funded a new subsidiary, Perceive Corporation (“Perceive”), which was created to focus on delivering edge inference solutions.

As of September 30, 2021, the Company’s ownership interest in Perceive was approximately 80 %.

As of March 31, 2022, the Company’s ownership interest in Perceive was approximately 80 %.

The operating results of Perceive have been consolidated in the Company’s condensed consolidated financial statements for all periods presented.

The Company is currently planning, subject to any required regulatory approvals, a separation of the Company’s product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies.

The Company continues to evaluate the optimal timing of the contemplated business separation and currently anticipates that such separation will be completed in the second half of 2022.

Reclassification

Certain reclassifications have been made to prior period balances in order to conform to the current period’s presentation.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes in the Company’s significant accounting policies during the nine months ended September 30, 2021, as compared to the significant accounting policies described in the Form 10-K.

There have been no significant changes in the Company’s significant accounting policies during the three months ended March 31, 2022, as compared to the significant accounting policies described in the Form 10-K.

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the amounts reported in the 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 estimation of variable consideration, judgment used to estimate the progress toward completion in the Company’s engineering services, the collectability of accounts receivable, other intangible assets and investments, the assessment of the recoverability of goodwill, 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 purchase accounting resulting from business combinations, among others.

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 estimation of variable consideration, the assessment of the recoverability of goodwill, 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 purchase accounting resulting from business combinations, among others.

Actual results experienced by the Company may differ from management’s estimates.

The COVID-19 pandemic has resulted in a global slowdown of economic activity which has reduced demand for a broad variety of goods and services, while disrupting sales channels, marketing activities and supply chains.

The Company’s business operations have been negatively impacted by the COVID-19 pandemic and related events, and the Company expects this disruption may continue to have a negative impact on its revenue and results of operations, especially in light of the spread of the highly contagious Delta variant.

The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic;

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Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”).

The purpose of the update is to reduce the complexity pertaining to certain areas in accounting for income taxes.

Key amendments from ASU 2019-12 include, but are not limited to, the accounting for hybrid tax regimes, step-up in tax basis for goodwill in non-business combination transactions, intraperiod tax allocation exception to the incremental approach, and interim period accounting for enacted changes in tax law.

The Company adopted the new standard prospectively on January 1, 2021 .

The adoption did not have an impact on the Company’s consolidated financial statements.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-08, “ Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ” (“ASU 2021-08”), which amends the guidance in ASC 805 to require that an entity (acquirer) recognize and measures contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (“Topic 606”).

As a result of the amendments, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its preacquisition financial statements.

ASU 2021-08 is effective for public business entities for fiscal years beginning after December 15, 2022.

Early adoption is permitted.

The Company elected to early adopt the new standard on January 1, 2022 .

The adoption did not have an impact on the Company’s condensed consolidated financial statements.

Recent Accounting Pronouncements

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In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative stand-alone selling price basis.

The determination of stand-alone selling price considers market conditions, the size and scope of the contract, customer and geographic information, and other factors.

The determination of stand-alone selling price considers market conditions, the size and scope

of the contract, customer and geographic information, and other factors.

When observable prices are not available, stand-alone selling price for separate performance obligations is based on the cost-plus-margin approach, considering overall pricing objectives.

The allocation of transaction price among performance obligations in a contract may impact the amount and timing of revenue recognized in the Consolidated Statements of Operations during a given period.

The allocation of transaction price among performance obligations in a contract may impact the amount and timing of revenue recognized in the Condensed Consolidated Statements of Operations during a given period.

When a contract with a customer includes a variable transaction price, an estimate of the consideration which the Company expects to be entitled to for transferring the promised goods or services is made at contract inception.

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The Company operates in two business segments.

In its IP Licensing segment, the Company licenses its innovations to leading companies in the broader entertainment and semiconductor industries, and those developing new technologies that will help drive the industries forward.

Licensing arrangements include access to one or more of the Company’s foundational patent portfolios and may also include access to some of its industry-leading technologies and proven know-how.

In its Product segment, the Company derives the majority of its revenue from licensing its technology to customers primarily through Technology License arrangements and Technology Solutions arrangements.

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For Technology Solutions arrangements, the customer receives access to a platform, media or data that includes frequent updates, where access to such updates is critical to the functionality of the technology.

In its IP Licensing segment, the Company licenses its innovations to leading companies in the media and semiconductor industries.

IP Licensing arrangements include access to one or more of the Company’s foundational patent portfolios and may also include access to some of its industry-leading technologies and proven know-how.

IP License Arrangements

In its IP Licensing segment, the Company licenses (i) its media patent portfolios (“Media IP licensing”) to multichannel video programming distributors, over-the-top video service providers, consumer electronics manufacturers, social media, and other new media companies and (ii) its semiconductor technologies and associated patent portfolios (“Semiconductor IP licensing”) to memory, sensor, radio frequency (“RF”) component, and foundry companies.

The Company licenses its IP portfolios under three revenue models:

(i) fixed-fee Media IP licensing, (ii) fixed-fee or minimum guarantee Semiconductor IP licensing, and (iii) per-unit or per-subscriber IP royalty licenses.

Fixed-fee Media IP licensing

interdependent or highly interrelated to the patented technologies provided at the inception of the agreement.

The Company treats these rights as a single performance obligation with revenue recognized on a straight-line basis over the term of the fixed-fee license agreement.

At times, the Company enters into license agreements in which a licensee is released from past patent infringement claims or is granted a license to ship an unlimited number of units or for an unlimited number of subscribers over a future period for a fixed fee.

In these arrangements, the Company allocates the transaction price between the release for past patent infringement claims and the future license which requires significant management judgment.

In determining the stand-alone selling price of the release for past patent infringement claims and the future license, the Company considers such factors as the number of units shipped in the past or the number of past subscribers and the relevant geographies of the shipped units or subscribers, the future number of subscribers or units, as well as the licensing rate the Company generally receives for per-subscriber or units shipped in the same geographies.

As the release from past patent infringement claims is generally satisfied at execution of the agreement, the transaction price allocated to the release from past patent infringement claims is generally recognized in the period the agreement is executed and the amount of transaction price allocated to the future license is recognized ratably over the future license term.

Fixed-fee or minimum guarantee Semiconductor IP licensing

The Company enters into Semiconductor IP licenses that have fixed fee or minimum guarantee arrangements, whereby licensees pay a fixed fee for the right to incorporate the Company’s IP technologies in the licensee’s products over the license term.

In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum.

The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the IP and begins to benefit from the license, net of the effect of any significant financing components calculated using customer-specific, risk-adjusted lending rates, with the related interest income being recognized over time on an effective rate basis.

For minimum guarantee agreements where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it believes the customer will exceed the minimum and adjusts the revenue based on actual usage once that is reported by the customer.

Per-unit or per-subscriber IP royalty licenses

The Company recognizes revenue from per-unit or per-subscriber IP royalty licenses in the period in which the licensee's sales or production are estimated to have occurred, which results in an adjustment to revenue when actual sales or production are subsequently reported by the licensee, which is generally in the month or quarter following usage or shipment.

Estimating customers’ monthly or quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.

Technology License Arrangements

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For those arrangements that include multiple performance obligations, the Company allocates the consideration as described above and recognizes revenue for each distinct performance obligation when control of the promised goods or services is transferred to the customer.

IP License Arrangements

In its IP Licensing segment, the Company licenses (i) its media patent portfolios (“Media IP licensing”) to multichannel video programming distributors, over-the-top video service providers, consumer electronics manufacturers, social media, and other new media companies and (ii) its semiconductor technologies and associated patent portfolios (“Semiconductor IP licensing”) to memory, sensors, radio frequency (“RF”) component, and foundry companies.

The Company licenses its IP portfolios under three revenue models:

(i) fixed-fee Media IP licensing, (ii) fixed-fee or minimum guarantee Semiconductor IP licensing, and (iii) per-unit or per-subscriber IP licenses.

Fixed-fee Media IP licensing

The Company's long-term fixed-fee Media IP licensing agreements, which are related to the TiVo businesses following the Mergers, provide its customers with rights to future patented technologies over the term of the agreement that are highly interdependent or highly interrelated to the patented technologies provided at the inception of the agreement.

The Company treats these rights as a single performance obligation with revenue recognized on a straight-line basis over the term of the fixed-fee license agreement.

In these arrangements, the Company allocates the transaction price between the release for past patent infringement claims and the future license.

Fixed-fee or minimum guarantee Semiconductor IP licensing

Per-unit or per-subscriber IP royalty licenses

The Company also generates revenue from non-recurring engineering (“NRE”) services, advertising, and hardware products, each of which was less than 5% of total revenue for all periods presented.

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The Company applies a practical expedient when disclosing revenue expected to be recognized from unsatisfied performance obligations to exclude contracts with customers with an original duration of less than one year ;

amounts attributable to variable consideration arising from (i) a sales-based or usage-based royalty of a technology license or (ii) when variable consideration is allocated entirely to a wholly unsatisfied performance obligation;

amounts attributable to variable consideration arising from (i) a sales-based or usage-based royalty of an intellectual property license or (ii) when variable consideration is allocated entirely to a wholly unsatisfied performance obligation;

or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation.

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Revenue disaggregated by product category/end market was as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Product revenue

Consumer Experience

Connected Car

Three Months Ended March 31,

IP Licensing revenue

Consumer Electronics

Connected Car

Media Platform

Total Product revenue

Total revenue

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The amount of unbilled contracts receivable may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date.

engineering costs for significant software customization or modification and set-up services to the extent deemed recoverable.

Contract assets also include the incremental costs of obtaining a contract with a customer, principally sales commissions when the renewal commission is not commensurate with the initial commission, and deferred engineering costs for significant software customization or modification and set-up services to the extent deemed recoverable.

Contract assets were recorded in the Condensed Consolidated Balance Sheets as follows (in thousands ):

September 30, 2021

March 31, 2022

December 31, 2021

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Total contract assets

The unbilled contracts receivable increase relates primarily to a change in billing process in the three months ended March 31, 2022.

This change has no impact on the Company’s cash flows.

The long-term unbilled contracts receivable increase relates primarily to the recognition of revenue from a multi-year contract with a customer in the three months ended March 31, 2022.

Contract Liabilities

Contract liabilities are mainly comprised of deferred revenue related to consumer lifetime subscriptions for the TiVo service, multi-period licensing or cloud-based services, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time.

Contract liabilities are mainly comprised of deferred revenue related to technology solutions arrangements, multi-period licensing, and other offerings for which the Company is paid in advance while the promised good or service is transferred to the customer at a future date or over time.

Deferred revenue also includes amounts received related to professional services to be performed in the future.

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It is generally considered to be of high credit quality due to past collection history and the nature of the customers.

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, 2021

Nine Months Ended September 30, 2021

Accounts Receivable

Unbilled Contracts Receivable

Accounts Receivable

Unbilled Contracts Receivable

Beginning balance

Provision for credit losses

Charged-off/other adjustments

Balance at end of period

(1) The charge-off of accounts receivable in the nine months ended September 30, 2021 was primarily related to a customer whose account had been substantially reserved for credit losses in 2020 due to its deteriorating financial condition and delinquent payment history.

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2020

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Accounts Receivable

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Beginning balance

Provision for credit losses

Provision for (reversal of) credit losses

Charged-off/other adjustments

Balance at end of period

(2) The increase in provision for credit losses was based on assessment of then current conditions, including the impact of the COVID-19 pandemic and anticipation of delayed or delinquent payments on existing accounts receivable as a result of declining financial health and liquidity positions of certain of the Company’s customers.

(1) The charge off of accounts receivable in the first quarter of 2021 was primarily related to a customer whose account had been substantially reserved for credit losses in 2020 due to deteriorating financial condition and delinquent payment history.

Additional Disclosures

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Revenue recognized in the period from:

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The Company's remaining revenue under contracts with performance obligations was as follows (in thousands) :

September 30, 2021

March 31, 2022

December 31, 2021

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Other current assets consisted of the following (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Income tax receivable

Prepaid income taxes

Prepaid expenses

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

September 30, 2021

March 31, 2022

December 31, 2021

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Other long-term assets consisted of the following (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Non-current income tax receivable

Long-term deferred tax assets

Non-current income tax receivable

Accrued liabilities consisted of the following (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Employee compensation and benefits

Third-party royalties

Accrued expenses

Accrued income taxes

Current portion of operating lease liabilities

Accrued severance

Third-party royalties

Current portion of operating lease liabilities

Other long-term liabilities consisted of the following (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

Long-term income tax payable

Accumulated other comprehensive income consisted of the following (in thousands):

September 30, 2021

Accumulated other comprehensive loss consisted of the following (in thousands):

March 31, 2022

December 31, 2021

Foreign currency translation adjustment, net of tax

Unrealized loss on available-for-sale debt securities, net of tax

Foreign currency translation adjustment, net of tax

NOTE 5 – FINANCIAL INSTRUMENTS

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Under ASU 2016-01 (Topic 321), equity securities are measured at fair value with unrealized gains and losses recognized in other income and expense, net, on the Condensed Consolidated Statements of Operations.

The following is a summary of marketable securities at September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021

The following is a summary of marketable securities at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

Allowance for Credit Losses

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Commercial paper

Treasury and agency notes and bills

Total debt securities

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Total marketable securities

At September 30, 2021 and December 31, 2020, the Company had $ 237.3 million and $ 257.1 million, respectively, in cash, cash equivalents and short-term investments.

A significant portion of these amounts was held in marketable securities, as

The remaining balance of $ 159.9 million and $ 135.0 million at September 30 , 2021 and December 31, 2020, respectively, was cash held in operating accounts not included in the tables above .

At March 31, 2022 and December 31, 2021, the Company had $ 266.8 million and $ 261.7 million, respectively, in cash, cash equivalents and short-term investments.

A significant portion of these amounts was held in marketable securities, as shown above.

The remaining balance of $ 164.4 million and $ 159.3 million at March 31, 2022 and December 31, 2021, respectively, was cash held in operating accounts not included in the tables above.

Debt Securities

The gross realized gains and losses on sales of marketable debt securities were not material during the three and nine months ended September 30, 2021 and 2020, respectively.

Unrealized losses on AFS debt securities were $ 0.1 million and $ 0.1 million, net of tax, as of September 30, 2021 and December 31, 2020, respectively.

The gross realized gains and losses on sales of marketable debt securities were not material during the three months ended March 31, 2022 and 2021, respectively.

Unrealized losses on AFS debt securities were $ 0.2 million and $ 0.1 million, net of tax, as of March 31, 2022 and December 31, 2021, respectively.

The Company evaluated whether the decline in fair value has resulted from credit losses or other factors and concluded these amounts were related to temporary fluctuations in value of AFS securities and were due primarily to changes in interest rates and market conditions of the underlying securities.

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The Company does not intend to sell the debt securities and it is more-likely-than-not that it will not be required to sell the investments before recovery of their amortized cost bases.

The Company did no t recognize a provision for credit losses related to its AFS debt securities for the three and nine months ended September 30, 2021 and 2020, respectively.

The following table summarizes the fair value and gross unrealized losses related to individual AFS debt securities at September 30, 2021 and December 31, 2020, which have been in a continuous unrealized loss position, aggregated by investment category and length of time (in thousands):

The Company did no t recognize a provision for credit losses related to its AFS debt securities for the three months ended March 31, 2022 and 2021, respectively.

The following table summarizes the fair value and gross unrealized losses related to individual AFS debt securities at March 31, 2022 and December 31, 2021, which have been in a continuous unrealized loss position, aggregated by investment category and length of time (in thousands):

Less Than 12 Months

12 Months or More

September 30, 2021

March 31, 2022

Cash and Cash Equivalents

AFS Debt Securities

Corporate bonds and notes

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December 31, 2021

Cash and Cash Equivalents

AFS Debt Securities

Corporate bonds and notes

Commercial paper

The estimated fair value of marketable debt securities by contractual maturity at September 30, 2021 is shown below (in thousands).

The estimated fair value of marketable debt securities by contractual maturity at March 31, 2022 is shown below (in thousands).

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

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Non-marketable Equity Securities

Investments in entities over which the Company has the ability to exercise significant influence, but does not hold a controlling interest, are accounted for using the equity method.

Under the equity method, the Company records its proportionate share of income or loss in other income and expense, net, in the Condensed Consolidated Statements of Operations.

Investments in entities over which the Company does not have the ability to exercise significant influence and which do not have readily determinable fair values, are initially recognized at cost and remeasured through earnings when there is an observable transaction involving the same or similar investment of the same issuer, or due to an impairment (referred to as the “measurement alternative”).

The fair value of non-marketable equity investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

The Company monitors its non-marketable securities portfolio for potential impairment.

When there is evidence that the expected fair value of the investment has declined to below the recorded cost, the impairment loss is recorded in other income and expense, net, in the Condensed Consolidated Statements of Operations.

Upon merging with TiVo on June 1, 2020, the Company assumed certain investments in non-marketable equity securities.

As of September 30, 2021 and December 31, 2020, other long-term assets included equity securities accounted for under the equity method with a carrying amount of $ 4.8 million and $ 4.2 million, respectively, and equity securities without a readily determinable fair value with a carrying amount of $ 0.1 million and $ 0.1 million, respectively.

No impairments or adjustments to the carrying amount of the Company's equity securities without a readily determinable fair value were recognized in the three and nine months ended September 30, 2021 and 2020, respectively.

As of March 31, 2022 and December 31, 2021, other long-term assets included equity securities accounted for under the equity method with a carrying amount of $ 4.7 million and $ 4.8 million, respectively, and equity securities without a readily determinable fair value with a carrying amount of $ 0.1 million and $ 0.1 million, respectively.

No impairments or adjustments to the carrying amount of the Company's equity securities without a readily determinable fair value were recognized in the three months ended March 31, 2022 and 2021, respectively.

NOTE 6 – FAIR VALUE

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The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs.

There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2020 and September 30, 2021.

The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of September 30, 2021 (in thousands):

There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2021 and March 31, 2022.

The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of March 31, 2022 (in thousands):

Active Markets

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Money market funds - equity securities (1)

Commercial paper - debt securities (3)

Corporate bonds and notes - debt securities (2)

Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheets.

Reported as AFS debt securities in the Condensed Consolidated Balance Sheets.

Commercial paper - debt securities (3)

Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheet.

Reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

Reported as cash and cash equivalents if purchased with an original maturity of three months or less at the date of purchase;

otherwise reported as AFS debt securities in the Condensed Consolidated Balance Sheets.

otherwise reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of December 31, 2021 (in thousands):

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Corporate bonds and notes - debt securities (2)

Treasury and agency notes and bills - debt securities (3)

Commercial paper - debt securities (3)

Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheets.

Reported as AFS debt securities in the Condensed Consolidated Balance Sheets.

Reported as cash and cash equivalents in the Condensed Consolidated Balance Sheet.

Reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

Reported as cash and cash equivalents if purchased with an original maturity of three months or less at the date of purchase;

otherwise reported as AFS debt securities in the Condensed Consolidated Balance Sheets.

otherwise reported as AFS debt securities in the Condensed Consolidated Balance Sheet.

Financial Instruments Not Recorded at Fair Value

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The carrying amounts and estimated fair values are as follows (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

2020 Term B Loan Facility (1)

Refinanced Tern B Loans (1)

2021 Convertible Notes

Refinanced Term B Loans (1)

Total long-term debt, net

Carrying amounts of long-term debt are net of unamortized debt discount and issuance costs of $ 25.4 million and $ 34.4 million as of September 30, 2021 and December 31, 2020, respectively.

Carrying amounts of long-term debt are net of unamortized debt discount and issuance costs of $ 23.1 million and $ 24.3 million as of March 31, 2022 and December 31, 2021, respectively.

See “Note 9 – Debt ” for additional information.

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The fair value of the debt was estimated based on the quoted market prices for the same or similar issues .

Non-recurring Fair Value Measurements

The following table represents the activity in intangible assets that are measured at fair value on a non-recurring basis (in thousands):

Balance at December 31, 2020

Assets acquired (1)

Balance at September 30, 2021

(1)This amount represents the value of the patents that were acquired by the Company during the third quarter of 2021.

The fair value of these assets was measured using both the market approach – estimating the value of the acquired assets by way of comparison with other comparable transactions, and the cost approach – estimating the value of the acquired assets based on the cost it would take for the Company to create a comparable set of assets through its own research and development (“R&D”) and patent prosecution efforts.

NOTE 7 – BUSINESS COMBINATIONS

Effective June 1, 2020 , Xperi and TiVo completed the merger of equals transaction (the “Merger”) contemplated by the Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019 , as amended on January 31, 2020 , (the “Merger Agreement”), by and among Xperi, TiVo, XRAY-TWOLF HoldCo Corporation (“Xperi Holding”), XRAY Merger Sub Corporation (“Xperi Merger Sub”) and TWOLF Merger Sub Corporation (“TiVo Merger Sub”).

Immediately prior to the consummation of the Merger, Xperi Holding changed its name to “Xperi Holding Corporation” (the “Company”).

Pursuant to the Merger Agreement, (i) Xperi Merger Sub was merged with and into Xperi, with Xperi surviving the merger as a subsidiary of Xperi Holding Corporation (the “Xperi Merger”) and (ii) TiVo Merger Sub was merged with and into TiVo, with TiVo surviving the merger as a subsidiary of Xperi Holding Corporation (the “TiVo Merger” and together with the Xperi Merger, the “Mergers”).

Immediately following the consummation of the Mergers, each of Xperi and TiVo became wholly-owned subsidiaries of the Company.

The Mergers created a leading consumer and entertainment product/solutions and IP licensing company.

The Company’s IP business includes one of the industry’s largest and most successful IP portfolios licensed to a diverse base of customers.

On the product side, the Company offers a seamless end-to-end entertainment experience from creation to consumption, with greater scale, technology depth and breadth, and a platform relevant to one of the biggest challenges consumers of entertainment face today – how to quickly and easily find, watch and enjoy entertainment.

The Company is currently contemplating and may pursue, subject to any required regulatory approvals, a separation of the Company’s product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies.

The Company continues to evaluate the optimal timing of the contemplated business separation and currently anticipates that such separation will not be completed earlier than the first half of 2022.

Merger Consideration

The consideration of $ 828.3 million for the Mergers was calculated as follows (amounts in thousands except exchange ratio and share price):

TiVo common shares outstanding as of June 1, 2020

TiVo exchange ratio

Xperi Holding Corporation common stock issued in exchange

Xperi Common Stock closing share price on June 1, 2020

Fair value of replaced TiVo equity awards relating to pre-acquisition vesting of the equity award holders’ requisite service periods

Total merger consideration

Purchase Price Allocation

Based on an evaluation of the provisions of ASC 805, “Business Combinations,” Xperi was determined to be the accounting acquirer in the Mergers.

The Company has applied the acquisition method of accounting that requires, among other things, that identifiable assets acquired and liabilities assumed generally be recognized on the balance sheet at fair value as of the acquisition date.

In determining the fair value, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being fair valued.

The estimation of fair value required significant judgment related to future net cash flows (including revenue, operating expenses, and working capital), discount rates reflecting the risk inherent in each cash flow stream, competitive trends, market comparables, and other factors.

Inputs were generally determined by taking into account historical data (supplemented by current and anticipated market conditions) and growth rates.

The preliminary fair value estimates and assumptions to measure the assets acquired and liabilities assumed were subject to change as

the Company obtained additional information during the measurement period.

During the three months ended June 30, 2021, t he Company completed its accounting for the Merger s with no further adjustments made to the fair value .

The following table sets forth the purchase price allocation , as well as adjustments made during the measurement period ($ in thousands ):

Estimated Useful

Fair Value (1)

Measurement Period

Adjustments (2)

Cash and cash equivalents

Accounts receivable

Unbilled contracts receivable

Other current assets

Long-term unbilled contracts receivable

Property and equipment

Operating lease right-of-use assets

Identifiable intangible assets:

Customer contracts and related relationships

Developed technology

Content database

Trademarks and tradenames

Total identifiable intangible assets

Other long-term assets

Accounts payable

Accrued legal fees

Accrued liabilities

Current portion of deferred revenue

Current portion of long-term debt

Deferred revenue, less current portion

Long-term deferred tax liabilities

Long-term debt

Noncurrent operating lease liabilities

Other long-term liabilities

Total purchase price

(1) As previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020.

(2) All adjustments were recorded during the 12-month period following the Merger date.

These measurement period adjustments primarily related to current indirect taxes payable, current and non-current income taxes receivable and payable, and deferred taxes as additional information was received and tax returns were finalized.

All measurement period adjustments were offset against goodwill.

Supplemental Pro Forma Information

The following unaudited pro forma financial information assumes the companies were combined as of January 1, 2019.

The unaudited pro forma financial information as presented below is for informational purposes only and is based on estimates and assumptions that have been made solely for purposes of developing such pro forma information.

This is not necessarily indicative of the results of operations that would have been achieved if the Mergers had taken place on January 1, 2019, nor is it necessarily indicative of future results.

Consequently, actual results could differ materially from the unaudited pro forma financial information presented below.

The following table presents the pro forma operating results as if TiVo had been included in the Company's Consolidated Statements of Operations as of January 1, 2019 (unaudited, in thousands):

Three Months Ended

Nine Months Ended

September 30, 2020

Net loss attributable to Xperi Holding Corporation

NOTE 7 – BUSINESS COMBINATION

On May 31, 2021, the Company completed its acquisition of certain assets and assumption of certain liabilities of MobiTV, Inc.

(“MobiTV”, and the acquisition, the “MobiTV Acquisition”), a provider of application-based Pay-TV video delivery solutions.

The acquisition expands the Company’s IPTV Managed Service capabilities, which is expected to grow the addressable market for the Company’s IPTV products and further secure TiVo’s position as a leading provider of Pay TV solutions.

The acquisition expanded the Company’s IPTV Managed Service capabilities, which is expected to grow the addressable market for the Company’s IPTV products and further secure TiVo’s position as a leading provider of Pay-TV solutions.

The net purchase price for the MobiTV Acquisition was $ 17.4 million in cash.

Preliminary Purchase Price Allocation

Purchase Price Allocation

The MobiTV Acquisition has been accounted for as a business combination, using the acquisition method.

The following table presents the allocation of the purchase price to the identifiable assets acquired and liabilities assumed based on the fair values at the acquisition date, with any excess of the purchase price over the estimated fair value of the identifiable net assets acquired recorded to goodwill, all of which is expected to be deductible for tax purposes.

The allocation of the purchase price was based upon a preliminary valuation and thus the estimates and assumptions used are subject to change.

Based upon the fair values acquired, the purchase price allocation is as follows ($ in thousands):

The following table sets forth the final purchase price allocation with no measure period adjustments identified ($ in thousands):

Estimated Useful

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Total purchase price

The above allocation of the purchase price is provisional and is still subject to change within the measurement period, including potential adjustments relating to income taxes and indirect taxes as additional information is received.

The final allocation of the purchase price is expected to be completed as soon as practicable, but no later than one year from the date of the acquisition.

The results of operations and cash flows relating to the business acquired pursuant to the MobiTV Acquisition have been included in the Company’s condensed consolidated financial statements for periods subsequent to May 31, 2021, and the related assets and liabilities were recorded at their estimated fair values in the Company’s Condensed Consolidated Balance Sheet as of May 31, 2021.

For the three and nine months ended September 30, 2021, the acquired MobiTV business contributed $ 3.4 million and $ 4.0 million in revenue, respectively, and $ 1.4 million and $ 2.5 million in operating losses, respectively, to the operating results of the Company.

The results of operations and cash flows relating to the business acquired pursuant to the MobiTV Acquisition have been included in the Company’s consolidated financial statements for periods subsequent to May 31, 2021, and the related assets and liabilities were recorded at their estimated fair values in the Company’s Consolidated Balance Sheet as of May 31, 2021.

The operations acquired in the MobiTV Acquisition are included in the Company’s Product segment.

Supplemental Pro Form Information

The following unaudited pro forma financial information assumes the MobiTV Acquisition was completed as of January 1, 2020.

This is not necessarily indicative of the results of operations that would have been achieved if the MobiTV Acquisition had taken place on January 1, 2020, nor is it necessarily indicative of future results.

Consequently, actual results could differ materially from the unaudited pro forma financial information presented below.

The following table presents the pro forma operating results as if the acquired operations of MobiTV had been included in the Company's Condensed Consolidated Statements of Operations as of January 1, 2020 (unaudited, in thousands):

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Net loss attributable to Xperi Holding Corporation

The unaudited supplemental pro forma information above includes the following pro forma adjustments:

removal of certain elements of the historical MobiTV business that were not acquired, elimination of inter-company transactions between MobiTV and TiVo, adjustments for transaction related costs, and adjustments to reflect the impact of purchase accounting adjustments.

The unaudited supplemental pro forma information above does not include any cost saving synergies from operating efficiencies.

NOTE 8 – GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

The changes to the carrying value of goodwill from January 1, 2021 through September 30, 2021 are reflected below (in thousands):

The changes to the carrying value of goodwill from January 1, 2022 through March 31, 2022 are reflected below (in thousands):

December 31, 2021

Goodwill acquired through a business acquisition (1)

September 30, 2021

(1) Related to the MobiTV Acquisition completed in June 2021.

For more information regarding the transaction, see “Note 7 - Business Combinations.”

(2) The Company’s reporting units include the Product segment and the IP Licensing segment (defined further in “Note 16 - Segment and Geographic Information ”).

Of the carrying value of goodwill, approximately $ 527.8 million was allocated to the Product segment and approximately $ 323.3 million was allocated to the IP Licensing segment as of September 30, 2021.

Goodwill adjustment related to Mergers in prior periods (1)

March 31, 2022 (2)

Reflects the correction of an error in the purchase price allocation for the Mergers to reduce goodwill and revenue.

The error was not material to the current period financial statements or any prior periods.

The Company's reporting units include the IP Licensing segment and the Product segment (defined further in “Note 16 - Segment and Geographic Information ”).

Of the carrying value of goodwill, approximately $ 322.3 million was allocated to the IP Licensing segment and approximately $ 527.8 million was allocated to the Product segment as of each of March 31, 2022 and December 31, 2021.

Goodwill at each reporting unit is evaluated for potential impairment annually, as of the beginning of the fourth quarter, and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable.

As part of its annual goodwill impairment test, the Company elected to proceed with a quantitative interim goodwill impairment test as of September 30, 2021.

Based on the quantitative assessment, the Company concluded that the fair value of the reporting units exceeded the carrying amount for both the Product and IP Licensing reporting units.

As a result, no goodwill impairment charges were recognized in the three months ended September 30, 2021.

Identified Intangible Assets

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

September 30, 2021

March 31, 2022

December 31, 2021

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Total intangible assets

In May 2021, patents were acquired through the MobiTV Acquisition with a purchase price value equal to $ 5.0 million.

See “Note 7 – Business Combinations.”

In May 2021, existing technology was acquired through the MobiTV Acquisition with a purchase price value equal to $ 3.3 million.

See “Note 7 – Business Combinations.”

In September 2021, patents were acquired by the Company with a fair value measured at $ 8.8 million.

See “Note 6 – Fair Value” for additional information.

As of September 30, 2021, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

As of March 31, 2022, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

2022 (remaining 9 months)

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The outstanding amounts of debt were as follows (in thousands):

September 30, 2021

March 31, 2022

December 31, 2021

2020 Term B Loan Facility

Refinanced Term B Loans

2021 Convertible Notes

Unamortized debt discount and issuance costs

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Total long-term debt, net of current portion

2020 Term B Loan Facility

On June 1, 2020, in connection with the consummation of the Mergers with TiVo , the Company entered into a Credit Agreement (the “2020 Credit Agreement”) by and among the Company, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

The 2020 Credit Agreement provided for a five-year senior secured term B loan facility in an aggregate principal amount of $ 1,050 million (the “2020 Term B Loan Facility”).

The interest rate applicable to loans outstanding under the 2020 Term B Loan Facility was equal to, at the Company’s option, either (i) a base rate plus a margin of 3.00 % per annum or (ii) LIBOR plus a margin of 4.00 % per annum.

Commencing on September 30, 2020, the 2020 Term B Loan Facility was amortized in aggregate quarterly amounts equal to (i) with respect to repayments occurring on or prior to June 1, 2023, 1.25 % of the original principal amount of the 2020 Term B Loan Facility and (ii) with respect to repayments occurring after June 1, 2023 and prior to June 1, 2025, 1.875 % of the original principal amount of the 2020 Term B Loan Facility, with the balance payable on the maturity date of the 2020 Term B Loan Facility (in each case subject to adjustment for prepayments).

The 2020 Term B Loan Facility was scheduled to mature on June 1, 2025 .

Upon the closing of the 2020 Credit Agreement, the Company borrowed $ 1,050 million under the 2020 Term B Loan Facility .

Net proceeds were used on June 1, 2020, together with cash and cash equivalents, to refinance the existing indebtedness of the combined Company, including paydown of the TiVo 2019 Term Loan of $ 734.6 million.

See “Note 7 – Business Combinations” for additional information relating to the Mergers.

Additionally, debt discount and issuance costs of approximately $ 39.7 million were incurred and capitalized in connection with the 2020 Term B Loan Facility in June 2020.

The Company commenced repaying quarterly installments under the 2020 Term B Loan Facility in the third quarter of 2020, and also elected to make a voluntary principal payment of $ 150.0 million on December 31, 2020.

Refinanced Term B Loans

On June 8, 2021, the Company and the loan parties entered into Amendment No.

1 to the 2020 Credit Agreement (the “Amendment”).

In connection with the Amendment, the Company made a voluntary prepayment of $ 50.6 million of the term loan outstanding under the 2020 Credit Agreement using cash on hand.

The Amendment provided for, among other things, (i) a replacement of the outstanding term loans with a new tranche of term loans (the “Refinanced Term B Loans”) in an aggregate

principal amount of $ 810.0 million , (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of base rate loans, 2.50 % per annum and (y) in the case of Eurodollar loans, LIBOR plus a margin of 3.50 % per annum , (iii) a prepayment premium of 1.00 % in connection with any repricing transaction with respect to the Refinanced Term B Loans within six months of the closing date of the Amendment, (iv) an extension of the maturity to June 8, 2028 , and (v) certain additional amendments, including amendments to provide the Company with additional flexibility under the covenant governing restricted payments .

On June 8, 2021, the Company amended that certain Credit Agreement dated June 1, 2020 by and among the Company, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “2020 Credit Agreement”).

The 2020 Credit Agreement initially provided for a five-year senior secured term B loan facility in an aggregate principal amount of $ 1,050 million (the “2020 Term B Loan Facility”).

In connection with the amendment (the “Amendment”), the Company made a voluntary prepayment of $ 50.6 million of the term loan outstanding under the 2020 Credit Agreement using cash on hand.

The Amendment provided for, among other things, (i) a new tranche of term loans (the “Refinanced Term B Loans”) in an aggregate principal amount of $ 810.0 million, (ii) a reduction of the interest rate margin applicable to such loans to (x) in the case of base rate loans, 2.50 % per annum and (y) in the case of Eurodollar loans, LIBOR plus a margin of 3.50 % per annum, (iii) a prepayment premium of 1.00 % in connection with any repricing transaction with respect to the Refinanced Term B Loans within six months of the closing date of the Amendment, (iv) an extension of the maturity to June 8, 2028 , and (v) certain additional amendments, including amendments to provide the Company with additional flexibility under the covenant governing restricted payments.

The Company commenced repaying quarterly installments under the Refinanced Term B Loans in the third quarter of 2021.

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The 2020 Credit Agreement, as amended, contains customary events of default, upon the occurrence of which, after any applicable cure period, the lenders will have the ability to accelerate all outstanding loans thereunder.

The 2020 Credit Agreement, as amended, also contains customary representations and warranties and affirmative and negative covenants that, among other things and subject to certain exceptions, restrict the ability of the Company and its subsidiaries to create or incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, transfer or sell assets and make restricted payments.

The Company was in compliance with all requirements as of September 30, 2021.

incur certain liens, incur or guarantee additional indebtedness, merge or consolidate with other companies, transfer or sell assets and make restricted payments.

The 2020 Credit Agreement, as amended, requires the Company to maintain a total net leverage ratio of no greater than 3.00x in order access an annual basket from which to make restricted payments (such as dividend payments and share repurchases).

The Company was in compliance with all requirements as of March 31,

The 2020 Credit Agreement, as amended, also requires the Company to make additional cash payments on an annual basis beginning in March 2023 based on certain leverage ratios and excess cash flow generated for the immediately preceding fiscal year.

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Under ASC 470-50, the remaining $ 2.6 million, primarily related to third-party fees, were recorded as selling, general and administrative expense in the second quarter of 2021.

2018 Amended Term B Loan

On December 1, 2016, in connection with the consummation of the acquisition of DTS, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, Royal Bank of Canada, as administrative agent and collateral agent, and the lenders party thereto.

The Credit Agreement provided for a $ 600.0 million seven-year term B loan facility (the “Term B Loan Facility”) which would mature on November 30, 2023 .

On January 23, 2018, the Company and the loan parties entered into an amendment to the Credit Agreement (the 2018 “Amendment”).

In connection with the 2018 Amendment, the Company made a voluntary prepayment of $ 100.0 million of the term loan outstanding under the Credit Agreement using cash on hand.

The 2018 Amendment provided for, among other things, a replacement of the outstanding initial term loan with the new tranche term B-1 loan in a principal amount of $ 494.0 million.

On June 1, 2020, the entire remaining balance of $ 344.0 million was paid off using proceeds from the 2020 Term B Loan Facility in connection with the Mergers.

As a result of the refinancing transaction, the Company recorded a loss on early extinguishment of debt of $ 8.3 million, which consisted of unamortized debt discount and issuance costs, in its Condensed Consolidated Statements of Operations during the second quarter of 2020.

2019 Term Loan Facility

In connection with the Mergers, the Company paid off the outstanding balance under TiVo’s 2019 Term Loan.

The 2019 Term Loan Facility Agreement was entered into on November 22, 2019 between TiVo, as borrower, and the lenders party thereto and HPS Investment Partners, LLC as administrative agent and collateral agent.

Under the 2019 Term Loan, TiVo borrowed $ 715.0 million, which was scheduled to mature on November 22, 2024 .

Under the 2019 Term Loan Facility Agreement, TiVo was required to pay a 3.0 % prepayment premium if the loan was prepaid on or prior to November 22, 2020.

Further , u nder the same Loan Facility Agreement, the Mergers triggered certain change of control conditions that constitute d an event of default, thus requiring the debt to be re paid immediately following the consummation of the Mergers .

Using the proceeds from the aforementioned 2020 Term B Loan Facility, the Company, on June 1, 2020, made a full repayment of the 2019 Term Loan along with the prepayment penalty for a total payoff amount of $ 734.6 million.

2021 Convertible Notes

Upon consummation of the TiVo Merger on June 1, 2020, the Company assumed $ 48.0 thousand of Convertible Senior Notes that were issued by TiVo Solutions Inc.

in September 2014 and matured on October 1, 2021 (the “2021 Convertible Notes”).

The 2021 Convertible Notes bore interest at an annual rate of 2.0 %, payable semi-annually in arrears on April 1 and October 1 of each year.

On September 24, 2021, the entire balance of $ 48.0 thousand was paid off.

Interest Expense and Expected Principal Payments

At September 30, 2021, $ 799.9 million in total debt was outstanding.

At March 31, 2022, $ 779.6 million in total debt was outstanding.

There were also $ 23.1 million of unamortized debt discount and issuance costs recorded as a reduction from the carrying amount of the debt.

Interest rate on the Refinanced Term B Loans, including the amortization of debt discount and issuance costs, was 4.2 % and interest is payable monthly.

Interest expense was $ 8.5 million and $ 30.4 million for the three and nine months ended September 30, 2021, respectively.

Interest expense was $ 13.4 million and $ 24.6 million for the three and nine months ended September 30, 2020, respectively.

Amortized debt discount and issuance costs, which were included in interest expense, amounted to $ 1.2 million and $ 5.3 million for the three and nine months ended September 30, 2021, respectively, and $ 2.3 million and $ 4.0 million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, future minimum principal payments for long-term debt are summarized as follows (in thousands):

Interest rate on the Refinanced Term B Loans, including the amortization of debt discount and issuance costs was 4.2 % and interest was payable monthly.

Interest expense was $ 8.4 million and $ 11.3 million for the three months ended March 31, 2022 and 2021, respectively.

Amortized debt discount and issuance costs, which were included in interest expense, amounted to $ 1.1 million and $ 2.3 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, future minimum principal payments for long-term debt are summarized as follows (in thousands):

2022 (remaining 9 months)

NOTE 10 – NET LOSS PER SHARE

NOTE 10 – NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted shares (in thousands):

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

March 31, 2022

March 31,2021

Weighted average shares of common stock outstanding

shares of restricted stock subject to repurchase

Total common shares-basic

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Total common shares-diluted

Basic net loss per share is computed using the weighted average number of shares of common stock outstanding during the period, excluding any unvested restricted stock awards that are subject to repurchase.

Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period, excluding any unvested restricted stock awards that are subject to repurchase.

Diluted net income per share is computed using the treasury stock method to calculate the weighted average number of shares of common stock and, if dilutive, potential common shares outstanding during the period.

Potentially dilutive common shares include unvested restricted stock awards and units and incremental common shares issuable upon the exercise of stock options, less shares repurchased from assumed

Potentially dilutive common shares include unvested restricted stock awards and units and incremental common shares issuable upon the exercise of stock options, less shares repurchased from assumed proceeds.

The assumed proceeds calculation includes actual proceeds to be received from the employee upon exercise and the average unrecognized stock compensation cost during the period.

For the three and nine months ended September 30, 2021, there was no difference in the weighted average number of common shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

A total of 5.5 million and 5.3 million shares, subject to stock options and restricted stock awards and units, were excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2021, respectively, because including them would have been anti-dilutive.

For the three and nine months ended September 30, 2020, there was no difference in the weighted average number of common shares used for the calculation of basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive.

A total of 5.6 million and 4.0 million shares, subject to stock options and restricted stock awards and units, were excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2020, respectively, because including them would have been anti-dilutive.

In the calculation of net income per share for the three months ended March 31, 2022 and 2021, 3.6 million and 1.1 million shares, respectively, subject to stock options and restricted stock awards and units were excluded from the computation of diluted net income per share as they were anti-dilutive.

NOTE 11 – STOCKHOLDERS’ EQUITY

As described in Note 7, Xperi and TiVo completed the Mergers on June 1, 2020 to form Xperi Holding Corporation.

Upon completion of the Mergers, each share of common stock of Xperi was converted into the right to receive one fully paid and non-assessable share of Company Common Stock.

Further upon completion of the Mergers, each share of TiVo Common Stock was converted into the right to receive 0.455 fully paid and non-assessable shares of the Company Common Stock (the “Exchange Ratio”), in addition to cash in lieu of any fractional shares of the Company Common Stock.

Following the Mergers, Xperi Common Stock and TiVo Common Stock were delisted from Nasdaq.

Since June 2, 2020, the shares of Company Common Stock have been listed for trading on Nasdaq under ticker symbol “XPER.”

Equity Incentive Plans

Prior to the Merger Date, the Company had implemented and granted equity awards under the Xperi Corporation Seventh Amended and Restated 2003 Equity Incentive Plan.

As of the effective date of the Mergers, no future grants will be made under the plan.

In connection with the Mergers and immediately prior to June 1, 2020, the Company adopted the Xperi Holding Corporation 2020 Equity Incentive Plan (the “2020 EIP”).

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Shares reserved under the Assumed Plans will be available for future grants.

As of September 30, 2021, there were 4.8 million shares reserved for future grants under both the 2020 EIP and the Assumed Plans.

As of March 31, 2022, there were 1.8 million shares reserved for future grants under both the 2020 EIP and the Assumed Plans.

A summary of the stock option activity is presented below (in thousands, except per share amounts):

4 unchanged sentences

Options canceled / forfeited / expired

Balance at September 30, 2021

Balance at March 31, 2022

Restricted Stock Awards and Units

Information with respect to outstanding restricted stock awards and units as of September 30, 2021 is as follows (in thousands, except per share amounts):

Information with respect to outstanding restricted stock awards and units (including both time-based vesting and performance-based vesting) as of March 31, 2022 is as follows (in thousands, except per share amounts):

Restricted Stock and Restricted Stock Units

5 unchanged sentences

Awards and units canceled / forfeited

Balance at September 30, 2021

Balance at March 31, 2022

Performance Awards and Units

14 unchanged sentences

All participants in the terminated offering will be transferred to the new offering period.

As of September 30, 2021 , there were 0.8 million shares reserved for grant under the Company’s 2020 ESPP.

As of March 31, 2022, there were 0.1 million shares reserved for grant under the Company’s 2020 ESPP.

Stock Repurchase Programs

1 unchanged sentence

On April 22, 2021, the Board authorized an additional $ 100.0 million of purchases under the existing stock repurchase plan.

As of September 30, 2021, the Company has repurchased a total of approximately 7.7 million shares of common stock, since inception of the plan, at an average price of $ 16.93 per share for a total cost of $ 129.9 million.

As of March 31, 2022, the Company has repurchased a total of approximately 10.0 million shares of common stock, since inception of the plan, at an average price of $ 17.24 per share for a total cost of $ 172.2 million.

As of December 31, 2021, the Company had repurchased a total of approximately 9.0 million shares of common stock, since inception of the plan, at an average price of $ 17.29 per share for a total cost of $ 155.0 million.

1 unchanged sentence

No expiration date has been specified for this plan.

As of September 30, 2021, the total remaining amount available for repurchase under this plan was $ 120.1 million.

The Company expects to continue to execute authorized repurchases from time to time under the plan.

As of March 31, 2022, the total remaining amount available for repurchase under this plan was $ 77.8 million.

The Company plans to continue to execute authorized repurchases from time to time under the plan.

The Company issues restricted stock units as part of the equity incentive plans described above.

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However, these withheld shares are not included in common stock repurchases under the Company's authorized share repurchase plan.

During the three months ended September 30, 2021 and 2020, the Company withheld 0.3 million and 0.2 million shares of common stock to satisfy $ 7.1 million and $ 3.3 million of required withholding taxes, respectively.

During the nine months ended September 30, 2021 and 2020, the Company withheld 0.7 million and 0.6 million shares of common stock to satisfy $ 15.4 million and $ 9.2 million of required withholding taxes, respectively.

During the three months ended March 31, 2022 and 2021, the Company withheld 0.7 million and 0.3 million shares of common stock to satisfy $ 11.1 million and $ 7.4 million of required withholding taxes, respectively.

NOTE 12 – STOCK-BASED COMPENSATION EXPENSE

The effect of recording stock-based compensation (“SBC”) expense for the three and nine months ended September 30, 2021 and 2020 is as follows (in thousands):

The effect of recording stock-based compensation (“SBC”) expense for the three months ended March 31, 2022 and 2021 is as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Cost of licensing, services and software revenue

March 31, 2022

March 31, 2021

Cost of revenue, excluding depreciation and amortization of intangible assets

Research, development and other related costs

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Tax effect on stock-based compensation expense

Net effect on net loss

SBC expense categorized by various equity components for the three and nine months ended September 30, 2021 and 2020 is summarized in the table below (in thousands):

Net effect on net income (loss)

SBC expense categorized by various equity components for the three months ended March 31, 2022 and 2021 is summarized in the table below (in thousands):

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Restricted stock awards and units

2 unchanged sentences

Total stock-based compensation expense

There were no options granted in the three and nine months ended September 30, 2021 and 2020.

In connection with termination of employment with a former executive on March 1, 2022, the Company entered into a Separation Agreement and Release with the executive, dated February 18, 2022 (the “Separation Agreement”).

Pursuant to the Separation Agreement, the Company approved, among other severance benefits, accelerated vesting of 372,244 of outstanding performance and time-based restricted stock units.

As a result of this modification, the Company recorded incremental SBC of approximately $ 2.2 million for the three months ended March 31, 2022.

There were no options granted in the three months ended March 31, 2022 and 2021.

The following assumptions were used to value the restricted stock units subject to market conditions granted during the period:

3 unchanged sentences

Expected volatility

*There were no market-based PSUs granted prior to July 2020.

*There were no market-based restricted stock units granted in the three months ended March 31, 2022.

ESPP grants occur in March and September.

Prior to the Mergers, the final ESPP grant under the legacy ESPP program was in February 2020.

The following assumptions were used to value the ESPP shares for these grants:

September 2021

September 2020

February 2020

Expected life (years)

3 unchanged sentences

NOTE 13 – INCOME TAXES

For the three months ended September 30, 2021, the Company recorded an income tax expense of $ 42.7 million on pretax loss of $ 3.7 million.

For the nine months ended September 30, 2021, the Company recorded an income tax expense of $ 35.8 million on a pretax loss of $ 7.9 million, which resulted in a year-to-date effective tax rate of ( 452.3 )%.

The income tax expense for the three and nine months ended September 30, 2021 was primarily related to foreign withholding taxes, base erosion and anti-abuse tax (“BEAT”) and unrealized foreign exchange loss from the prior year South Korea refund claims, which have remained relatively fixed on a forecast basis quarter over quarter.

The negative tax rate is the result of the relatively fixed tax expense recorded against a small pre-tax loss.

The Company’s effective tax rate was based on a projected 2021 U.S.

GAAP pretax loss and varies significantly from the 21 % U.S.

For the three months ended March 31, 2022, the Company recorded an income tax expense of $ 21.5 million on pretax income of $ 45.5 million, which resulted in an effective tax rate of 47.3 %.

The income tax expense for the three months ended March 31, 2022 was primarily related to foreign withholding taxes, U.S.

federal base erosion and anti-abuse tax (“BEAT”), state income taxes, and unrealized foreign exchange loss from the prior year South Korea refund claims.

For the three months ended March 31, 2021, the Company recorded an income tax benefit of $ 4.0 million on pretax income of $ 0.5 million, which resulted in an effective tax rate of ( 786.4 )%.

The income tax benefit for the three months ended March 31, 2021 was primarily related to foreign withholding taxes, BEAT and unrealized foreign exchange loss from the prior year South Korea refund claims.

The Company’s negative effective tax rate is based on the projected 2021 GAAP U.S.

pretax loss and is significantly less than the 21 % U.S.

federal tax rate.

For the three months ended September 30, 2020, the Company recorded an income tax expense of $ 0.5 million on a pretax loss of $ 30.1 million and for the nine months ended September 30, 2020, the Company recorded an income tax benefit of $ 6.8 million on a pretax loss of $ 41.6 million, which resulted in an effective tax rate of 16.3 % for the nine months ended September 30, 2020.

The tax benefit of $6.8 million is comprised of a $ 12.2 million tax benefit related to the five month pre-merger period and a tax expense of $ 5.4 million related to the four month post-merger period.

The five month pre-merger income tax benefit of $12.2 million was primarily related to a net decrease in valuation allowance as a result of the Mergers, deduction from foreign-derived intangible income, releases of unrecognized tax benefits due to the lapse of applicable statutes of limitation, and deduction from transaction expenses, offset by tax expense from operating income, shortfalls from stock-based compensation, certain non-deductible expenses, and unrealized foreign exchange losses from the prior period South Korea refund claim.

The four-month post-merger income tax expense of $5.4 million was primarily related to income tax expense from foreign operations, foreign withholding taxes and U.S.

federal minimum tax offset by unrealized foreign exchange gains from the current period South Korean refund claim.

As of September 30, 2021, gross unrecognized tax benefits increased $ 1.9 million to $ 229.1 million compared to $ 227.2 million as of December 31, 2020.

The Company’s effective tax rate is the result of the most significant components of income tax expense, primarily driven by foreign withholding and BEAT.

The computed negative effective tax rate is applied to the year-to-date U.S.

profit resulting in an income tax benefit for the quarter ended March 31, 2021.

As of March 31, 2022, gross unrecognized tax benefits increased $ 3.6 million to $ 244.0 million compared to $ 240.4 million as of December 31, 2021.

This was included in long-term deferred tax and other long-term liabilities on the Condensed Consolidated Balance Sheets.

Of this amount, $ 95.2 million would affect the effective tax rate if recognized.

As of September 30, 2020, gross unrecognized tax benefits of $ 181.7 million were included in long-term deferred tax and other long-term liabilities on the Condensed Consolidated Balance Sheets.

As of March 31, 2021, unrecognized tax benefits of $ 228.7 million were included in long-term deferred tax and other long-term liabilities on the Condensed Consolidated Balance Sheets.

Of this amount, $ 96.0 million would affect the effective tax rate if recognized.

1 unchanged sentence

It is the Company's policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

The Company recognized interest and penalties related to unrecognized tax benefits of $ 1.1 million and an insignificant amount for the nine months ended September 30, 2021 and 2020, respectively.

Accrued interest and penalties were $ 3.6 million and $ 2.5 million as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, the Company’s 2016 through 2020 tax years are generally open and subject to potential examination in one or more jurisdictions.

Earlier tax years for the Company and its subsidiaries are also open in certain jurisdictions which

are currently subject to examination.

The Company recognized interest and penalties related to unrecognized tax benefits of $ 0.2 million and $ 0.6 million for the three months ended March 31, 2022 and 2021, respectively.

Accrued interest and penalties were $ 3.1 million and $ 2.8 million as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, the Company’s 2017 through 2021 tax years are generally open and subject to potential examination in one or more jurisdictions.

Earlier tax years for the Company and its subsidiaries are also open in certain jurisdictions which are currently subject to examination.

In addition, in the U.S., 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.

The Company has submitted withholding tax refund claims with the South Korean authorities, and the final outcome is not anticipated to be settled within the next twelve m onths .

The Company has submitted a withholding tax refund claim with the South Korean authorities and the final outcome is not anticipated to be settled within the next twelve months.

NOTE 14 – LEASES

14 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Fixed lease cost (1)

5 unchanged sentences

Three Months Ended,

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating leases

September 30, 2021

March 31, 2022

December 31, 2021

3 unchanged sentences

Operating leases

Future minimum lease payments and related lease liabilities as of September 30, 2021 were as follows (in thousands):

Future minimum lease payments and related lease liabilities as of March 31, 2022 were as follows (in thousands):

Operating Lease Payments (1)

8 unchanged sentences

(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.

As of December 31, 2020, future minimum lease payments were as follows (in thousands):

Operating Lease Payments

Sublease Income

Net Operating Lease Payments

Total lease payments

imputed interest

Present value of lease liabilities:

current obligations under leases (accrued liabilities)

Noncurrent operating lease liabilities

NOTE 15 – COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

These arrangements primarily include unconditional purchase obligations to service providers.

As of September 30, 2021, the Company’s total future unconditional purchase obligations were approximately $ 127.2 million.

As of March 31, 2022, the Company’s total future unconditional purchase obligations were approximately $ 116.6 million.

Inventory Purchase Commitment

2 unchanged sentences

A significant portion of the Company’s purchase commitments arising from these agreements consist of firm, non-cancelable and unconditional purchase commitments.

In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company’s requirements based on its

business needs prior to firm orders being placed.

As of September 30 , 202 1 , the Company had total purchase commitments for inventory of $ 10.8 million, of which $ 1.3 million was accrued in the Condensed Consolidated Balance Sheet.

In certain instances, these agreements allow the Company the option to cancel, reschedule or adjust the Company’s requirements based on its business needs prior to firm orders being placed.

As of March 31, 2022, the Company had total purchase commitments for inventory of $ 9.8 million, of which $ 2.9 million was accrued in the Condensed Consolidated Balance Sheet.

Indemnifications

12 unchanged sentences

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 immaterial.

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, should they occur.

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, should they occur .

Contingencies

14 unchanged sentences

The Company reports its financial results within two reportable segments:

(1) Product and (2) Intellectual Property (“IP”) Licensing.

(1) Intellectual Property (“IP”) Licensing and (2) Product.

There are certain corporate overhead costs that are not allocated to these reportable segments because these operating amounts are not considered in evaluating the operating performance of the Company’s business segments.

1 unchanged sentence

The Company’s Chief Executive Officer is also the CODM as defined by the authoritative guidance on segment reporting.

The Product segment consists primarily of licensing Company-developed audio, digital radio, imaging, edge-based machine learning and multi-channel video user experience (“UX”) solutions.

Audio, digital radio, imaging solutions and edge-based machine learning include the delivery of software and/or hardware-based solutions to the Company’s consumer electronics (“CE”) customers, automotive manufacturers or their supply chain partners.

UX products and services revenue is primarily derived from multi-channel video service providers and CE manufacturers, licensing the TiVo service and selling TiVo-enabled devices like the Stream 4K, Personalized Content Discovery, enriched Metadata, viewership data and advertising.

The IP Licensing segment consists primarily of licensing the Company’s innovations to leading companies in the media and semiconductor industries.

The IP Licensing segment consists primarily of licensing the Company’s innovations to leading companies in the broader entertainment and semiconductor industries, and those developing new technologies that will help drive the industries forward.

Licensing arrangements include access to one or more of the Company’s foundational patent portfolios and may also include access to some of its industry-leading technologies and proven know-how.

In media, the Company’s licensees include multichannel video programming distributors, OTT video service providers, consumer electronics manufacturers, social media, and other new media companies.

In semiconductor, the Company’s licensees include memory, sensors, RF component, and foundry companies.

For Technology License arrangements, the customer obtains rights to the technology delivered at the commencement of the agreement.

The Company does not identify or allocate assets by reportable segment, nor does the CODM evaluate reportable segments using discrete asset information.

2 unchanged sentences

Although the CODM uses operating income to evaluate reportable segments, operating costs included in one segment may benefit other segments.

The following table sets forth the Company’s segment revenue, operating expenses and operating income (loss) for the three and nine months ended September 30, 2021 and 2020 (in thousands):

The following table sets forth the Company’s segment revenue, operating expenses and operating income for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Product segment

March 31, 2022

March 31, 2021

IP Licensing segment

Product segment

Total revenue

Operating expenses:

Product segment

IP Licensing segment

Product segment

Unallocated operating expenses (1)

Total operating expenses

Operating income (loss):

Product segment

Operating income:

IP Licensing segment

Product segment

Unallocated operating expenses (1)

Total operating income (loss)

Total operating income

Unallocated operating expenses consist primarily of selling, marketing, general and administrative expenses, such as administration, human resources, finance, information technology, corporate development and procurement.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

March 31, 2022

March 31, 2021

Europe and Middle East

For both the three months ended September 30, 2021 and 2020, there were no customers that individually accounted for 10% or more of total revenue.

For the nine months ended September 30, 2021 and 2020, there were no customers and one customer, respectively, that each accounted for 10% or more of total revenue.

As of September 30, 2021 and December 31, 2020, there were no customers and two customers, respectively, that each accounted for 10% or more of total accounts receivable.

For the three months ended March 31, 2022 and 2021, there were one customer and no customers, respectively, that each accounted for 10% or more of total revenue.

As of both March 31, 2022 and December 31, 2021, there was one customer that individually accounted for 10% or more of total accounts receivable.

NOTE 17 - SUBSEQUENT EVENTS

On October 29, 2021 , the Board declared a cash dividend of $ 0.05 per share of common stock, payable on December 20, 2021 to the stockholders of record at the close of business on November 29, 2021 .

On April 29, 2022 , the Board declared a cash dividend of $ 0.05 per share of common stock, payable on June 21, 2022 to the stockholders of record at the close of business on May 31, 2022 .

At the 2022 annual stockholders meeting on April 29, 2022, shareholders approved (i) an amendment to the 2020 EIP adding an additional 8.8 million shares to the share reserve and (ii) an amendment to the 2020 ESPP adding an additional 6.0 million shares to the share reserve.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements