What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 180 added, 154 removed, 609 unchanged (35% of the section changed)

2 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

7 unchanged sentences

Operating loss

Interest and other income, net

Interest and other income (expense), net

Interest expense - debt

9 unchanged sentences

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive loss:

Change in foreign currency translation adjustment

Unrealized (loss) gain on cash flow hedges

Unrealized gain (loss) on cash flow hedges

Comprehensive loss

4 unchanged sentences

(in thousands, except par value)

June 30, 2024

September 30, 2024

December 31, 2023

20 unchanged sentences

Deferred revenue

Short-term debt

Liabilities held for sale

10 unchanged sentences

$ 0.001 par value;

6,000 shares authorized as of June 30, 2024 and December 31, 2023;

no shares issued and outstanding as of June 30, 2024 and December 31, 2023

6,000 shares authorized as of September 30, 2024 and December 31, 2023;

no shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock:

$ 0.001 par value;

140,000 shares authorized as of June 30, 2024 and December 31, 2023;

45,746 and 44,211 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

140,000 shares authorized as of September 30, 2024 and December 31, 2023;

44,776 and 44,211 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

21 unchanged sentences

Cash flows from financing activities:

Repurchases of common stock

Proceeds from issuance of common stock under employee stock purchase plan

12 unchanged sentences

Costs capitalized for internal-use software included in accrued liabilities

(1) Includes $ 12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.

(1) Included $ 12.3 million of cash and cash equivalents classified as held for sale at December 31, 2023.

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

1 unchanged sentence

(in thousands)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Comprehensive

Noncontrolling

Balances at April 1, 2024

Balances at July 1, 2024

Change in ownership interest of the Company

Vesting of restricted stock units, net of tax withholding

Issuance of common stock under employee stock purchase plan

Repurchases and retirement of common stock

Stock-based compensation

Foreign currency translation adjustment

Unrealized loss on cash flow hedges

Balances at June 30, 2024

Six Months Ended June 30, 2024

Unrealized gain on cash flow hedges

Balances at September 30, 2024

Nine Months Ended September 30, 2024

Comprehensive

4 unchanged sentences

Issuance of common stock under employee stock purchase plan

Repurchases and retirement of common stock

Stock-based compensation

1 unchanged sentence

Unrealized loss on cash flow hedges

Balances at June 30, 2024

Balances at September 30, 2024

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

1 unchanged sentence

(in thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Comprehensive

Noncontrolling

Balances at April 1, 2023

Balances at June 1, 2023

Change in ownership interest of the Company

Vesting of restricted stock units, net of tax withholding

Issuance of common stock under employee stock purchase plan

Stock-based compensation

1 unchanged sentence

Unrealized loss on cash flow hedges

Balances at June 30, 2023

Six Months Ended June 30, 2023

Balances at September 30, 2023

Nine Months Ended September 30, 2023

Comprehensive

6 unchanged sentences

Foreign currency translation adjustment

Unrealized gain on cash flow hedges

Balances at June 30, 2023

Unrealized loss on cash flow hedges

Balances at September 30, 2023

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

8 unchanged sentences

Xperi Spin-Off

In June 2020, Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”) announced plans to separate into two independent publicly-traded companies (the “Separation”), one comprising its intellectual property (“IP”) licensing business and one comprising its product business (“Xperi Product”).

On October 1, 2022 (the “Separation Date”), the Former Parent completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all the outstanding common stock of its product-related business (formerly known as Xperi Product, and hereinafter “Xperi Inc.,” “Xperi” or the Company to the stockholders of record of the Former Parent as of the close of business on September 21, 2022 , the record date (the “Record Date”) for the Distribution.

In June 2020, Xperi Holding Corporation (“Xperi Holding,” “Adeia,” or the “Former Parent”) announced plans to separate into two independent publicly-traded companies (the “Separation”), one comprising its intellectual property licensing business and one comprising its product business (“Xperi Product”).

On October 1, 2022, the Former Parent completed the Separation (the “Spin-Off”) through a pro-rata distribution (the “Distribution”) of all the outstanding common stock of its product-related business (formerly known as Xperi Product, and hereinafter “Xperi Inc.,” “Xperi” or the Company to the stockholders of record of the Former Parent as of the close of business on September 21, 2022 , the record date (the “Record Date”) for the Distribution.

Each Former Parent stockholder of record received four shares of Xperi common stock, $ 0.001 par value, for every ten shares of the Former Parent’s common stock, $ 0.001 par value, held by such stockholder as of the close of business on the Record Date.

6 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

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

As of June 30, 2024, the Company owned approximately 76.2 % of the outstanding equity interest of Perceive.

In the fourth quarter of 2018, the Company funded a new subsidiary, Perceive Corporation (“Perceive”, now known as Xperi Pylon Corporation), which was created to focus on edge inference hardware and software technologies.

As of September 30, 2024, the Company owned approximately 76.4 % of the outstanding equity interests of Perceive.

Refer to Notes 6— Divestitures and 14— Subsequent Events for details concerning an asset sale transaction related to Perceive.

Unaudited Interim Financial Statements

The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”) for interim financial information.

The accompanying unaudited interim condensed consolidated financial statements are presented in accordance with the applicable rules and regulations of the SEC for interim financial information.

The amounts as of December 31, 2023 have been derived from the Company’s annual audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 1, 2024 (the “Form 10-K”).

2 unchanged sentences

These unaudited interim condensed consolidated financial statements should be read in conjunction with the Form 10-K.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024 or any future period and the Company makes no representations related thereto.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated 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 fair value of note receivable and deferred consideration in connection with the Divestiture (as described in Note 6— Divestiture ), capitalization of internal-use software, loss contingencies related to indemnification liability, the assessm ent 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 valuation of performance-based awards with a market condition.

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 fair value of note receivable and deferred consideration in connection with the AutoSense Divestiture (as described in Note 6— Divestitures ), capitalization of internal-use software, loss contingencies related to indemnification liability, the assessm ent 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 valuation of performance-based awards with a market condition.

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

7 unchanged sentences

The Company performs ongoing credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral.

There was one individually significant customer with revenue exceeding 10% of total revenue for the three months ended June 30, 2024, whereas no single customer exceeded 10% of total revenue in all other comparative periods presented .

As of June 30, 2024 and December 31, 2023, no si ngle custome r represented 10 % or more of the Company’s net balance of accounts receivable.

As described in Note 6, in the first quarter of 2024, the Company received a note receivable and deferred consideration from Tobii AB (“Tobii”) as part of the consideration for divesting its AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”).

One customer accounted for 10 % or more of total revenue for the three and nine months ended September 30, 2024, whereas no customer accounted for 10% or more of total revenue in the other comparative periods presented .

As of September 30, 2024 and December 31, 2023, no customer accounted for 10% or more of the Company’s net balance of accounts receivable.

As described in Note 6— Divestitures , in the first quarter of 2024, the Company received a note receivable and deferred consideration from Tobii AB (“Tobii”) as part of the consideration for divesting its AutoSense in-cabin safety business and related imaging solutions (the “AutoSense Divestiture”).

Both of these instruments are potentially exposed to credit risk arising from default on repayment from Tobii.

3 unchanged sentences

Based on the results of the internally generated cash flow projections, the Company expects Tobii to make full payment on both instruments in accordance with the underlying agreement.

Accordingly, no allowance for credit losses was recorded as of June 30, 2024.

Accordingly, no allowance for credit losses was recorded as of September 30, 2024.

Recent Accounting Pronouncements

59 unchanged sentences

The Company actively monitors and enforces its technology licenses, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s technologies without a license.

As a result of these activities, the Company may, from time to time, recognize revenue from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, or from legal judgments in a license dispute.

These settlements and recoveries may cause revenue to be higher than expected during a particular reporting period and such settlements and recoveries may not occur in subsequent periods.

The Company recognizes revenue from

settlements and recoveries when a binding agreement has been executed or a revised royalty report has been received and the Company concludes collection is probable.

The Company recognizes revenue from settlements

and recoveries when a binding agreement has been executed or a revised royalty report has been received and the Company concludes collection is probable.

Disaggregation of Revenue

2 unchanged sentences

The following table summarizes revenue by timing of recognition (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Recognized over time

2 unchanged sentences

The following table summarizes revenue by product category (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consumer Electronics

3 unchanged sentences

The following table summarizes revenue by geographic location (in thousands):

Three Months Ended June 30,

Europe and Middle East

Three Months Ended September 30,

Latin America

Europe and Middle East

Total revenue

Six Months Ended June 30,

Nine Months Ended September 30,

Europe and Middle East

6 unchanged sentences

Contract assets primarily consist of unbilled contracts receivable that are expected to be received from customers in future periods, where revenue is recognized upon the completion of performance obligations, but in advance of billings.

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

The amount of unbilled contracts receivable may not exceed their net realizable value and is classified as noncurrent if the amounts are expected to be invoiced more than one year from the reporting date.

Contract Liabilities

Contract liabilities are mainly comprised of deferred revenue, which arises when cash payments are received in advance of performance obligations being satisfied.

Deferred revenue generally consists of prepaid licenses or other fees, amounts received related to NRE services to be performed in the future, 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 generally consists of prepaid licenses or other fees 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.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Revenue recognized in the period from:

2 unchanged sentences

ups, recoveries, and settlements) (1)

(1) True ups represent the differences between the Company’s quarterly estimates of per-unit royalty revenue and actual production/sales-based royalties reported by licensees in the following period.

Recoveries represent corrections or revisions to previously reported per-unit royalties by licensees, generally resulting from the Company’s inquiries or compliance audits.

Settlements represent resolutions of litigation or disputes during the period for past royalties owed.

Settlements represent resolutions of disputes or litigation during the period for past royalties owed.

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue associated with certain non-cancelable fixed fee arrangements and engineering services contracts that have not yet been recognized.

As of June 30, 2024, the Company’s remaining performance obligations and the period over which they are expected to be recognized were as follows (in thousands):

Remaining performance obligations represent contracted revenue that has not yet been recognized.

As of September 30, 2024, the Company’s remaining performance obligations and the period over which they are expected to be recognized were as follows (in thousands):

Year Ending December 31:

1 unchanged sentence

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Accounts Receivable

6 unchanged sentences

Ending balance

Six Months Ended June 30,

Nine Months Ended September 30,

Accounts Receivable

8 unchanged sentences

Prepaid expenses and other current assets consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

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

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

Property and equipment, net

(1) Includes $ 2.6 million and $ 1.6 million as of June 30, 2024 and December 31, 2023, respectively, of accumulated amortization associated with capitalized internal-use software.

The following table summarizes the capitalization and amortization of internal-use software for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

(1) Includes $ 3.1 million and $ 1.6 million as of September 30, 2024 and December 31, 2023, respectively, of accumulated amortization associated with capitalized internal-use software.

The following table summarizes the capitalization and amortization of internal-use software for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Costs capitalized associated with internal-use software

1 unchanged sentence

Accrued liabilities consisted of the following (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Current portion of operating lease liabilities

Third-party royalties

Accrued other taxes

Third-party royalties

Accrued income taxes

1 unchanged sentence

Non-marketable Equity Securities

As of June 30, 2024 and December 31, 2023, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $ 4.3 million and $ 4.9 million, respectively.

No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three and six months ended June 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $ 4.6 million and $ 4.9 million, respectively.

No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three and nine months ended September 30, 2024 and 2023.

Derivatives Instruments

11 unchanged sentences

Location in Balance Sheet

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Prepaid expenses and other current assets

Fair value — foreign exchange contract liabilities, net amount

Accrued liabilities

Notional value held to buy U.S.

5 unchanged sentences

The gross amounts of the Company’s foreign currency forward contracts and the net amounts recorded in the Company’s Condensed Consolidated Balance Sheets were as follows (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

1 unchanged sentence

Gross amount of recognized liabilities

Net derivative (liabilities) assets

Net derivative assets

The changes in AOCL related to the cash flow hedges consisted of the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning balance

Other comprehensive (loss) gain before reclassification

Other comprehensive gain (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss into net loss

Net current period other comprehensive (loss) gain

Net current period other comprehensive gain (loss)

Ending balance

The following table summarizes the total gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The following table summarizes the total gains recognized upon settlement of the hedged transactions in the Condensed Consolidated Statement of Operations for three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

3 unchanged sentences

These instruments were all re-designated as foreign currency cash flow hedges in July 2023.

For the three and six months ended June 30, 2023, gains on the undesignated derivatives were $ 0.5 million and $ 0.7 million, respectively .

NOTE 5 – FAIR VALUE

12 unchanged sentences

The following table presents the fair value hierarchy for the Company’s assets and liabilities recorded at their carrying amount, but for which the fair value is disclosed (in thousands):

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Senior unsecured promissory note

The fair value of the note receivable, including accrued interest, and the deferred consideration resulting from the Divestiture (as described in Note 6— Divestiture ) were estimated based on an income and market approach with valuation inputs such as the U.S.

The fair value of the note receivable, including accrued interest, and the deferred consideration resulting from the AutoSense Divestiture (as described in Note 6— Divestitures ) were estimated based on an income and market approach with valuation inputs such as the U.S.

Treasury constant maturity yields, comparable bond yields, and credit spreads over the term of the same or similarly issued instruments.

3 unchanged sentences

The Company classifies its debt within Level 2 of the fair value hierarchy.

NOTE 6 – DIVESTITURE

In December 2023, the Company entered into a definitive agreement with Tobii pursuant to the Divestiture.

The Divestiture represented a 100 % equity sale transaction of two of the Company’s wholly-owned subsidiaries and was expected to streamline the Company’s business to further focus its business on entertainment-related products and services.

All of the assets and liabilities associated with the Divestiture were classified as held for sale as of December 31, 2023.

The Divestiture was completed on January 31, 2024 (the “Closing Date”) for total consideration of $ 44.3 million, comprising $ 10.8 million of cash, a note receivable from Tobii (the “Tobii Note”) of $ 27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $ 15.0 million, which was estimated to have a fair value of $ 5.8 million based on a present value factor on the Closing Date.

The $ 10.8 million of cash included in the total consideration represents the cash balance that was transferred to Tobii on the Closing Date to support operations during the transition and was subsequently returned to the Company, and as such, this amount is included in the assets sold as of January 31, 2024 and in the total consideration received.

As previously disclosed in the Form 10-K, Tobii was required to pay the Company the acquired closing cash balance, less certain adjustments, promptly after the Closing Date.

NOTE 6 – DIVESTITURES

Perceive Corporation

On August 14, 2024, the Company and its subsidiary, Perceive (now known as Xperi Pylon Corporation) (“Seller”), of which the Company owned approximately 76.4 % of the equity interests, entered into an Asset Purchase Agreement (the “Agreement”) with Amazon.com Services LLC (“Buyer”) pursuant to which Buyer has agreed to purchase and assume from Seller substantially all the assets and certain liabilities of Seller for $ 80.0 million in cash, including a holdback of $ 12.0 million to be held for 18 months after the closing of the transaction to secure the Company’s and Seller’s indemnification obligations (the “Perceive Transaction”).

The Perceive Transaction was subsequently completed on October 2, 2024 (the “Closing Date”).

The Perceive Transaction did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

The following table summarizes the carrying amounts of the assets and liabilities classified as held for sale in connection with the Perceive Transaction on the Company’s condensed consolidated balance sheet as of September 30, 2024 (in thousands):

September 30, 2024

Prepaid expenses and other current assets

Property and equipment, net

Operating lease right-of-use assets

Other noncurrent assets

Total assets held for sale

Accrued liabilities

Other noncurrent liabilities

Total liabilities held for sale

Net assets held for sale

AutoSense In-cabin Safety Business and Related Imaging Solutions

In December 2023, the Company entered into a definitive agreement with Tobii in connection with the AutoSense Divestiture.

The AutoSense Divestiture represented a 100 % equity sale transaction of two of the Company’s wholly-owned subsidiaries and was expected to streamline the Company’s business to further focus its business on entertainment-related products and services.

All of the assets and liabilities associated with the AutoSense Divestiture were classified as held for sale as of December 31, 2023.

On January 31, 2024, the AutoSense Divestiture was completed for total consideration of $ 44.3 million, comprised of $ 10.8 million of cash, a note receivable from Tobii (the “Tobii Note”) of $ 27.7 million, and deferred consideration (as described under Deferred Consideration below) totaling $ 15.0 million, which was estimated to have a fair value of $ 5.8 million based on a present value factor as of January 31, 2024.

The $ 10.8 million of cash included in the total consideration represents the cash balance that was transferred to Tobii upon completion of the AutoSense Divestiture to support operations during the transition and was subsequently returned to the Company, and as such, this amount is included in the assets sold as of January 31, 2024 and in the total consideration received.

As previously disclosed in the Form 10-K, Tobii was required to pay the Company the acquired closing cash balance, less certain adjustments, promptly following the completion of the AutoSense Divestiture.

In addition, there may be potential earnout payments (as described under Contingent Consideration below) payable in 2031, contingent upon the future success of the divested AutoSense in-cabin safety business.

In connection with the Divestiture, the Company also recorded a liability of $ 7.1 million for potential indemnification of certain pre-Closing matters.

As of the Closing Date, the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):

In connection with the AutoSense Divestiture, the Company also recorded a liability of $ 7.1 million for potential indemnification of certain pre-closing date matters.

As of January 31, 2024 , the Company derecognized the carrying amounts of the following assets and liabilities (in thousands):

January 31, 2024

15 unchanged sentences

(1) Total assets held for sale also included certain fully amortized finite-lived intangible assets with an original cost of $ 35.2 million.

Upon the completion of the Divestiture, the Company recognized a gain of $ 22.9 million in the first quarter of 2024.

The Divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

Upon the completion of the AutoSense Divestiture, the Company recognized a gain of $ 22.9 million in the first quarter of 2024.

The AutoSense Divestiture did not represent a strategic shift that would have a major effect on the Company’s consolidated results of operations, and therefore, its results of operations were not reported as discontinued operations.

Note Receivable from Tobii AB

10 unchanged sentences

The Company elected to present accrued interest within the carrying amount of note receivable, noncurrent, in the Condensed Consolidated Balance Sheets.

As of June 30, 2024, the carrying amount of the Tobii Note is as follows (in thousands):

June 30, 2024

As of September 30, 2024, the carrying amount of the Tobii Note is as follows (in thousands):

September 30, 2024

Outstanding principal amount

1 unchanged sentence

Carrying amount—note receivable, noncurrent

For the three and six months ended June 30, 2024, the Company recognized interest income of $ 0.5 million and $ 0.9 million, respectively.

For the three and nine months ended September 30, 2024, the Company recognized interest income of $ 0.6 million and $ 1.5 million, respectively.

Deferred Consideration

6 unchanged sentences

Total future payments

At the Closing Date, there was $ 9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment.

For the three and six months ended June 30, 2024, the Company accreted $ 0.3 million and $ 0.4 million of the discount as interest income, respectively.

As of June 30, 2024, the net carrying amount of the deferred consideration is as follows (in thousands):

June 30, 2024

At the closing date of the Tobbi Note, there was $ 9.2 million of discount on the deferred consideration to be accreted as interest income up to the date of the final payment.

For the three and nine months ended September 30, 2024, the Company accreted $ 0.3 million and $ 0.7 million of the discount as interest income, respectively.

As of September 30, 2024, the net carrying amount of the deferred consideration is as follows (in thousands):

September 30, 2024

Total deferred consideration

3 unchanged sentences

The earnout represents potential incremental cash consideration, and the payment is contingent upon the achievement of certain targeted shipments, between January 1, 2024 and December 31, 2030, of qualified automotive products featuring the AutoSense in-cabin safety technology and the related imaging solutions.

At the Closing Date, the Company elected to apply the gain contingency guidance under ASC 450— Contingencies , as it could not reasonably estimate shipment amounts.

At the closing date of the AutoSense Divestiture, the Company elected to apply the gain contingency guidance under ASC 450— Contingencies , as it could not reasonably estimate shipment amounts.

As a result, the Company deferred the recognition of the contingent consideration until it becomes realized or realizable.

1 unchanged sentence

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

June 30, 2024

September 30, 2024

Net Carrying Value

21 unchanged sentences

Total intangible assets (1)

(1) Total intangible assets excluded certain finite-lived intangible assets with a gross amount of $ 35.2 million, which were fully amortized and classified as held for sale as of December 31, 2023 in connection with the Divestiture (as described in Note 6 — Divestiture ).

As of June 30, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

(1) Total intangible assets excluded certain finite-lived intangible assets with a gross amount of $ 35.2 million, which were fully amortized and classified as held for sale as of December 31, 2023 in connection with the AutoSense Divestiture (as described in Note 6 — Divestitures ).

As of September 30, 2024, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

Year Ending December 31:

11 unchanged sentences

The Promissory Note does not contain any financial covenants.

As of June 30, 2024, $ 50.0 million in principal balance was outstanding.

Interest expense on the Promisso ry Note was $ 0.8 million for both the three months ended June 30, 2024 and 2023, and $ 1.5 million for the both six months ended June 30, 2024 and 2023.

The principal amount of $ 50.0 million on the Promissory Note was classified as current in the Condensed Consolidated Balance Sheets as of September 30, 2024.

Interest expense on the Promisso ry Note was $ 0.8 million and $ 0.7 million for the three months ended September 30, 2024 and 2023, respectively;

and $ 2.3 million and $ 2.2 million for the nine months ended September 30 , 2024 and 2023, respectively.

NOTE 9 – NET LOSS PER SHARE

3 unchanged sentences

The following table sets forth the computation of basic and diluted net loss per share attributable the Company (in thousands, except per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net loss attributable to the Company - basic and diluted

2 unchanged sentences

The following potentially dilutive shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented (in thousands):

Three and Six Months Ended June 30,

Three and Nine Months Ended September 30,

Restricted stock units

7 unchanged sentences

The vesting criteria for RSUs has historically been the passage of time or meeting certain performance-based objectives, and continued service through the vesting period over three or four years for time-based awards or three years for performance-based awards.

As of June 30, 2024, there were approximately 4.6 million shares reserved for future grants under the 2022 EIP.

As of September 30, 2024 , there were approximately 4.8 million shares reserved for future grants under the 2022 EIP.

Employee Stock Purchase Plans

10 unchanged sentences

On May 31, 2024, the Company issued 577,826 shares under the 2022 ESPP, net of shares withheld to satisfy withholding tax requirements for certain employees, for aggregate net proceeds of $ 4.3 million.

As of June 30, 2024, there were 3.1 million shares reserved for future issuance under the 2022 ESPP.

As of September 30, 2024, there were 3.1 million shares reserved for future issuance under the 2022 ESPP.

The following table summarizes the valuation assumptions used in estimating the fair value of the 2022 ESPP for the offering periods in effect using the Black-Scholes option pricing model:

Six Months Ended June 30,

Nine Months Ended September 30,

Expected life (years)

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Stock Options

Stock option activity for the six months ended June 30, 2024 is as follows (in thousands, except per share amounts):

Stock option activity for the nine months ended September 30, 2024 is as follows (in thousands, except per share amounts):

Balance at December 31, 2023

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Options canceled / forfeited / expired

Balance at June 30, 2024

There were no stock options granted during the six months ended June 30, 2024.

Balance at September 30, 2024

There were no stock options granted during the nine months ended September 30, 2024.

Restricted Stock Units

Information with respect to outstanding RSUs (including both time-based vesting and performance-based vesting) for the six months ended June 30, 2024 is as follows (in thousands, except per share amounts):

Information with respect to outstanding RSUs (including both time-based vesting and performance-based vesting) for the nine months ended September 30, 2024 is as follows (in thousands, except per share amounts):

based Vesting

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Canceled / forfeited

Balance at June 30, 2024

Balance at September 30, 2024

Performance-Based Awards

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The following assumptions were used to value the market-based PSUs granted during the period:

Six Months Ended June 30,

Nine Months Ended September 30,

Expected life (years)

Risk-free interest rate

4.54 % — 4.96 %

Dividend yield

Expected volatility

46.14 % — 49.02 %

Stock Repurchase Programs

In April 2024, the Company’s Board of Directors (the “Board”) authorized the repurchase of up to $ 100.0 million of its common stock (the “Program”).

Under the Program, the Company may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means.

The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program.

During the three months ended September 30, 2024, the Company repurchased a total of 1,121,200 shares of common stock, at an average price of $ 8.92 per share for a total cost of $ 10.0 million.

The shares repurchased were permanently retired.

No expiration date has been specified for this Program.

As of September 30, 2024, the total remaining amount available for repurchase was $ 90.0 million.

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

Stock-Based Compensation

Total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Total stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue, excluding depreciation and amortization of intangible assets

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Total stock-based compensation expense

Stock-based compensation expense categorized by award type for the three and six months ended June 30, 2024 and 2023 is summarized in the table below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Stock-based compensation expense categorized by award type for the three and nine months ended September 30, 2024 and 2023 is summarized in the table below (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Total stock-based compensation expense

As of June 30, 2024, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):

June 30, 2024

As of September 30, 2024, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):

September 30, 2024

Unrecognized Stock-Based Compensation

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NOTE 11 – INCOME TAXES

For the three and six months ended June 30, 2024, the Company recorded an income tax expense of $ 9.3 million and $ 13.6 million on a pretax loss of $ 21.4 million and $ 30.5 million, respectively;

which resulted in an effective tax rate of ( 43.4 )% and ( 44.4 )%, respectively.

The income tax expense for the three and six months ended June 30 , 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

For the three and nine months ended September 30, 2024, the Company recorded an income tax expense of $ 2.9 million and $ 16.4 million on a pretax loss of $ 16.9 million and $ 47.4 million, respectively, which resulted in an effective tax rate of ( 17.1 )% and ( 34.7 )%, respectively.

The income tax expense for the three and nine months ended September 30 , 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

federal income taxes, and state income taxes.

For the three and six months ended June 30, 2023, the Company recorded an income tax expense of $ 5.1 million and $ 4.8 million on a pretax loss of $ 34.3 million and $ 67.5 million, respectively;

which resulted in an effective tax rate of ( 14.9 )% and ( 7.1 )%, respectively.

The income tax benefit for the three and six months ended June 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

For the three and nine months ended September 30, 2023, the Company recorded an income tax expense of $ 9.7 million and $ 14.5 million on a pretax loss of $ 32.4 million and $ 99.9 million, respectively, which resulted in an effective tax rate of ( 29.9 )% and ( 14.5 )%, respectively.

The income tax expense for the three and nine months ended September 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

federal income taxes, and state income taxes.

As of June 30, 2024, gross unrecognized tax benefits of $ 16.2 million decreased by $ 7.4 million compared to December 31, 2023.

Of the total decrease, $ 6.9 million related to the Divestiture completed in January 2024.

As of September 30, 2024, gross unrecognized tax benefits of $ 15.1 million decreased by $ 8.5 million compared to December 31, 2023.

Of the total decrease, $ 6.9 million related to the AutoSense Divestiture completed in January 2024, and $ 1.2 million related to the settlement of an Ireland tax claim.

Of the $ 15.1 million gross unrecognized tax benefits, $ 1.1 million would affect the effective tax rate, if recognized.

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

Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023, accrued interest and penalties were $ 0.1 million and $ 0.4 million, respectively.

As of June 30, 2024, the Company’s 2019 through 2024 tax years are generally open and subject to potential examination in one or more jurisdictions.

Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, accrued interest and penalties were $ 0.1 million and $ 0.4 million, respectively.

As of September 30, 2024, the Company’s 2019 through 2024 tax years are generally open and subject to potential examination in one or more jurisdictions.

In addition, in the United States, 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 examinatio n.

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Income from subleases is recognized as a reduction to selling, general and administrative expenses.

Due to the change in how the office facilities were being used, a significant decrease in the expected market price of the operating lease right-of-use (“ROU”) assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate market, the Company recorded impairment charges of $ 1.1 million in the six months ended June 30, 2023 to reduce the carrying amount of certain operating ROU assets and property and equipment, including related leasehold improvements.

There were no impairment charges recorded in the three and six months ended June 30, 2024.

Due to the change in how the office facilities were being used, a significant decrease in the expected market price of the operating lease right-of-use (“ROU”) assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate market, the Company recorded impairment charges of $ 1.1 million in the nine months ended September 30, 2023 to reduce the carrying amount of certain operating ROU assets and property and equipment, including related leasehold improvements.

There were no impairment charges recorded in the three and nine months ended September 30, 2024.

The components of operating lease costs were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Fixed lease cost (1)

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The following table presents supplemental cash flow information arising from lease transactions (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cash payments included in the measurement of operating lease liabilities

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The weighted-average remaining term of the Company’s operating leases and the weighted-average discount rate used to measure the present value of the operating lease liabilities are as follows:

June 30, 2024

September 30, 2024

December 31, 2023

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Weighted-average discount rate

Future minimum lease payments and related lease liabilities as of June 30, 2024 were as follows (in thousands):

Future minimum lease payments and related lease liabilities as of September 30, 2024 were as follows (in thousands):

Year Ending December 31:

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These arrangements primarily include unconditional purchase obligations to service providers.

As of June 30, 2024, the Company’s total future unconditional purchase obligations were approximately $ 134.9 million.

As of September 30, 2024, the Company’s total future unconditional purchase obligations were approximately $ 128.2 million.

Indemnifications

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As permitted under Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited;

potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited;

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 not material.

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The Company expects it or its subsidiaries will be involved in similar legal proceedings in the future, including proceedings to ensure proper and full payment of royalties by licensees under the terms of their license agreements.

Accruals for loss contingencies are recognized when a loss is probable, and the amount of such loss can be reasonably estimated.

An adverse decision in any legal actions could result in a loss of the Company’s proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from others, limit the value of the Company’s licensed technology or otherwise negatively impact the Company’s stock price or its business and consolidated financial results.

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NO TE 14 – SUBSEQUENT EVENTS

In February 2024, the Company began to explore strategic alternatives, including, but not limited to, the sale of substantially all the assets of the Perceive subsidiary (the “Perceive Assets”), which had a total carrying value of approximately $ 7.5 million as of June 30, 2024.

The Company concluded that the criteria for presentation of the Perceive Assets as held-for-sale included in ASC 360— Property, Plant and Equipment were met after the balance sheet date of June 30, 2024 but prior to the issuance of these financial statements.

Accordingly, the Company plans to reclassify the related Perceive Assets as held-for-sale during the third quarter of 2024.

The potential disposition of the Perceive Assets is not considered a strategic shift that will have a major effect on the Company’s consolidated results of operations, and therefore is not considered to be discontinued operations.

On October 2, 2024, the Company completed the sale of substantially all of the assets and certain liabilities of its subsidiary, Perceive, to Amazon.com Services LLC for $ 80.0 million in cash, including an indemnification holdback of $ 12.0 million to be held for 18 months after the Closing Date, to secure the Company’s and Seller’s indemnification obligations, pursuant to the terms of the Agreement entered into in August 2024 (as described in Note 6— Divestitures ).

All of the assets and liabilities associated with the Perceive Transaction were classified as held for sale as of September 30, 2024.

The Company is currently evaluating the accounting impact resulting from the Perceive Transaction and expects to record a gain in the fourth quarter of 2024.

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