What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 207 added, 273 removed, 516 unchanged (48% of the section changed)

2 unchanged sentences

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

4 unchanged sentences

Amortization expense

Impairment of long-lived assets

Total operating expenses

Operating loss

Interest and other income (expense), net

Interest and other income, net

Interest expense - debt

5 unchanged sentences

Net loss per share attributable to the Company - basic and diluted

Weighted-average number of shares used in net loss per share calculations - basic and diluted

Weighted-average number of shares used in computing net loss per share attributable to the Company - basic and diluted

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

1 unchanged sentence

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Other comprehensive loss:

Change in foreign currency translation adjustment

Reclassification of foreign currency translation adjustments into net loss upon liquidation of foreign subsidiaries

Foreign currency translation adjustment

Unrealized gain (loss) on cash flow hedges

5 unchanged sentences

(in thousands, except par value)

September 30, 2024

March 31, 2025

December 31, 2024

4 unchanged sentences

Prepaid expenses and other current assets

Assets held for sale

Total current assets

Note receivable, noncurrent

Deferred consideration from divestiture

Deferred consideration from divestitures

Unbilled contracts receivable, noncurrent

4 unchanged sentences

Other noncurrent assets

Assets held for sale, noncurrent

LIABILITIES AND EQUITY

4 unchanged sentences

Short-term debt

Liabilities held for sale

Total current liabilities

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Other noncurrent liabilities

Liabilities held for sale, noncurrent

Total liabilities

2 unchanged sentences

$ 0.001 par value;

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

6,000 shares authorized as of March 31, 2025 and December 31, 2024;

no shares issued and outstanding as of March 31, 2025 and December 31, 2024

Common stock:

$ 0.001 par value;

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

140,000 shares authorized as of March 31, 2025 and December 31, 2024;

45,519 and 44,328 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated deficit

Total Company stockholders’ equity

Noncontrolling interest

Total liabilities and equity

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Gain from divestiture

Depreciation of property and equipment

Amortization of intangible assets

Stock-based compensation expense

Impairment of long-lived assets

Amortization of intangible assets

Depreciation of property and equipment

Accrued interest income from note receivable

Accretion of discount from deferred consideration from divestitures

Gain from divestiture

Deferred income taxes

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Cash flows from financing activities:

Repurchases of common stock

Proceeds from issuance of common stock under employee stock purchase plan

Repayment of short-term debt

Withholding taxes related to net share settlement of equity awards

Net cash (used in) provided by financing activities

Payment of debt issuance costs

Proceeds from long-term debt

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

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Supplemental disclosure of noncash investing and financing activities:

Unpaid withholding taxes related to net share settlement of equity awards

Costs capitalized for internal-use software included in accrued liabilities

Debt issuance costs included in accounts payable

Property and equipment included in accounts payable

Note receivable in exchange for consideration from divestiture

Deferred consideration from divestiture

Costs capitalized for internal-use software included in accrued liabilities

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

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2024

Comprehensive

Noncontrolling

Balances at July 1, 2024

Change in ownership interest of the Company

Vesting of restricted stock units, net of tax withholding

Repurchases and retirement of common stock

Stock-based compensation

Foreign currency translation adjustment

Unrealized gain on cash flow hedges

Balances at September 30, 2024

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Comprehensive

Noncontrolling

Balances at January 1, 2025

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 September 30, 2024

Reclassification of foreign currency translation adjustments into net loss upon liquidation of foreign subsidiaries

Unrealized gain on cash flow hedges

Balances at March 31, 2025

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

1 unchanged sentence

(in thousands)

Three Months Ended September 30, 2023

Comprehensive

Noncontrolling

Balances at June 1, 2023

Change in ownership interest of the Company

Vesting of restricted stock units, net of tax withholding

Stock-based compensation

Foreign currency translation adjustment

Unrealized loss on cash flow hedges

Balances at September 30, 2023

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Comprehensive

3 unchanged sentences

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 September 30, 2023

Balances at March 31, 2024

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

5 unchanged sentences

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

The Company operates in one reportable business segment and groups its business into four categories:

The Company operates in one reportable business segment and groups its revenue into four categories:

Pay-TV, Consumer Electronics, Connected Car and Media Platform.

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 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.

As a result of the Distribution, Xperi became an independent, publicly-traded company and its common stock is listed under the symbol “XPER” on the New York Stock Exchange.

In connection with the Separation and the Distribution, the Former Parent was renamed and continues as Adeia Inc.

and also changed its stock symbol to “ADEA” on the Nasdaq Global Select Market.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries, as well as an entity in which the Company has a controlling financial interest.

The Company’s financial statements were prepared on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries.

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”, 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.

For reporting periods in fiscal year 2024 and prior, the Company owned a controlling financial interest of its former subsidiary, Perceive Corporation (“Perceive”, later known as Xperi Pylon Corporation).

In December 2024, Perceive was dissolved after all of its remaining assets and liabilities were distributed to the Company.

Unaudited Interim Financial Statements

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”).

The amounts as of December 31, 2024 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, 2024, filed on February 27, 2025 (the “Form 10-K”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations.

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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 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.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025 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 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.

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, 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 valuation of performance-based awards with a market condition.

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

Concentration of Credit and Other Risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents, accounts receivable, unbilled contracts receivable, a note receivable and deferred consideration from divestiture.

The Company maintains cash and cash equivalents with large financial institutions, and at times, the deposits may exceed the federally insured limits.

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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.

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.

For the three months ended March 31, 2025 and 2024, no customer accounted for 10% or more of total revenue .

As of March 31, 2025 and December 31, 2024, no customer represented 10% or more of the Company’s net balance of accounts receivable.

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

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

The credit risk associated with the note receivable is mitigated by establishing a floating lien and security interest in certain of Tobii’s assets, rights, and properties, whereas the deferred consideration is not secured by any collateral.

The Company uses certain techniques, such as internally generated cash flow projections on the principal and interest of each instrument, to determine the likelihood that the note receivable or deferred consideration will be repaid.

Further, the Company assesses each instrument for credit losses and provides a reserve when full payment on the instruments may not occur as expected.

The Company utilizes valuation methodologies such as internally generated cash flow projections on the principal and interest of each instrument, along with the review of certain other data points, to determine the likelihood that the note receivable or deferred consideration will be repaid.

Further, the Company assesses each instrument for credit losses and provides a reserve when full payment on the instruments may not occur as expected, in which case the reserve reflects the excess of the amortized cost basis over the results of the cash flow projections.

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 September 30, 2024.

Accordingly, no allowance for credit losses was recorded as of March 31, 2025.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires significant segment expenses and other segment related items to be disclosed on an interim and annual basis.

The new disclosure requirements are also applicable to companies with a single reportable segment.

This guidance is effective on a retrospective basis for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions.

This guidance is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2024, with early adoption permitted.

This guidance is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The standard requires that public business entities disclose additional information about specific expense categories in the notes to financial statements for interim and annual reporting periods.

The standard will become effective for the Company’s 2027 annual financial statements and interim financial statements thereafter and may be applied prospectively to periods after the adoption date or retrospectively for all prior periods presented in the financial statements, with early adoption permitted.

The Company is currently evaluating the impact of this guidance on the disclosures within its consolidated financial statements.

NOTE 2 – REVENUE

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In these instances, the Company typically has a single performance obligation related to these ongoing activities in the underlying arrangement, and revenue is generally recognized over the period the solution is provided.

There are certain fixed fee on-premise licensed software arrangements where revenue is recognized immediately upon the delivery of the licensed technology.

In the case of certain fixed fee on-premise licensed software arrangements, revenue is recognized immediately upon the delivery of the licensed technology.

Hosted solutions and access to our platform is considered a single performance obligation with revenue being recognized over the period the solution is provided.

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The Company generally recognizes royalty revenue from these licenses based on units shipped or manufactured, similar to the revenue recognition described above in “Consumer Electronics”.

Certain customers may enter into fixed fee or minimum guarantee agreements, also similar to the revenue recognition described above in “Consumer Electronics”.

Automotive infotainment and related revenue is generally recognized over time as the customer obtains access to the solutions and underlying data.

Certain customers may enter into fixed fee or minimum guarantee agreements, also similar to the revenue recognition described above in “Consumer Electronics.” Automotive infotainment and related revenue is generally recognized over time as the customer obtains access to the solutions and underlying data.

Media Platform

The Company generates revenue from advertising, TV viewership data, and licensing of the Vewd app framework and core middleware solutions.

The Company generates revenue from advertising, TV viewership data, TV schedule metadata for ad measurement and programming analytics, and licensing of the core middleware solutions.

Advertising revenue is generally recognized when the related advertisement is provided.

TV viewership data revenue is generally recognized over time as the customer obtains the underlying data.

License revenue for the Vewd solutions is generally recognized either on a per-unit royalty or a minimum guarantee or fixed fee basis, similar to as described in the “ Consumer Electronics ” section above.

TV schedule metadata for ad measurement and programming analytics is generally recognized over time as the customer obtains the scheduled data.

License revenue for the core middleware solutions is generally recognized either on a per-unit royalty or a minimum guarantee or fixed fee basis, similar to “ Consumer Electronics ” described in the section above.

Hardware Products, Services and Settlements/Recoveries

The Company sells hardware products, primarily to end consumers, within the Pay-TV, Media Platform, and Consumer Electronics product categories.

The Company sells hardware products, primarily to end consumers, within the Pay-TV and Consumer Electronics product categories.

Hardware product revenue is generally recognized when the promised product is delivered.

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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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Recognized over time

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Consumer Electronics

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

Three Months Ended September 30,

Latin America

Europe and Middle East

Three Months Ended March 31,

Total revenue

Nine Months Ended September 30,

Three Months Ended March 31,

Europe and Middle East

Latin America

Total revenue

A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, Europe, the Middle East, and Latin America, and it is expected that this revenue will continue to account for a significant portion of total revenue in future periods.

Contract Balances

Contract Assets

A contract asset represents a right to consideration that is conditional upon factors other than the passage of time.

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 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 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.

A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia, Europe and the Middle East.

Revenue generated from Asia accounts for a significant portion of total revenue, which the Company expects to continue in future periods.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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 that are generally received in the following period, and may include other changes in estimates.

(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 reports that are generally received in the following period and may include other changes in estimates.

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

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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):

As of March 31, 2025, 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:

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Allowance for Credit Losses

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

Unbilled Contracts Receivable

Accounts Receivable

Unbilled Contracts Receivable

Beginning balance

Provision for credit losses

Recoveries/charge-off

Ending balance

Nine Months Ended September 30,

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Accounts Receivable

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

September 30, 2024

March 31, 2025

December 31, 2024

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

September 30, 2024

March 31, 2025

December 31, 2024

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Property and equipment, net

(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,

(1) Includes $ 5.5 million and $ 4.1 million as of March 31, 2025 and December 31, 2024, 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 months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Costs capitalized associated with internal-use software

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Accrued liabilities consisted of the following (in thousands):

September 30, 2024

March 31, 2025

December 31, 2024

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Accrued other taxes

Third-party royalties

Accrued income taxes

Third-party royalties

NOTE 4 – FINANCIAL INSTRUMENTS

Non-marketable Equity Securities

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.

As of March 31, 2025 and December 31, 2024, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $ 4.5 million and $ 4.7 million, respectively.

No impairments to the carrying amount of the Company’s non-marketable equity securities were recognized in the three months ended March 31, 2025 and 2024.

Derivatives Instruments

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815— Derivatives and Hedging .

The effective portion of the gain or loss on the derivatives are reported as a component of accumulated other comprehensive loss (“AOCL”) in stockholders’ equity and reclassified into earnings on the Condensed Consolidated Statements of Operations (Unaudited) in the period upon which the hedged transactions are settled.

The effective portion of the gain or loss on the derivatives are reported as a component of accumulated other comprehensive loss (“AOCL”) in stockholders’ equity and reclassified into net loss on the condensed consolidated statements of operations (Unaudited) in the period the hedged transactions are settled.

The notional and fair values of all derivative financial instruments were as follows (in thousands):

Location in Balance Sheet

September 30, 2024

March 31, 2025

December 31, 2024

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Prepaid expenses and other current assets

Fair value — foreign exchange contract assets, net amount

Accrued liabilities

Notional value held to buy U.S.

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dollars in exchange for other currencies

The Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other.

All of the Company’s derivative financial instruments are eligible for netting arrangements that allow the Company and its counterparty to net settle amounts owed to each other.

Derivative assets and liabilities that can be net settled under these arrangements have been presented in the Company's condensed consolidated balance sheets on a net basis.

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):

September 30, 2024

March 31, 2025

December 31, 2024

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Gross amount of recognized liabilities

Net derivative assets

Net derivative assets (liabilities)

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Beginning balance

Other comprehensive gain (loss) before reclassification

Amounts reclassified from accumulated other comprehensive loss into net loss

Amounts reclassified from accumulated other comprehensive loss (gain) into net loss

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 nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes the (losses) gains recognized upon settlement of the hedged transactions in the condensed consolidated statements of operations for three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Research and development

Selling, general and administrative

Undesignated Derivatives

For derivatives that were not designated as hedge instruments, they were measured and reported at fair value as a derivative asset or liability in the Condensed Consolidated Balance Sheets with their corresponding changes in the fair value recognized as gains or losses in interest and other income, net in the Condensed Consolidated Statements of Operations.

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

NOTE 5 – FAIR VALUE

The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities.

The Company carries its financial instruments at fair value with the exception of its note receivable, deferred consideration from divestitures, short-term debt, and long-term debt.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

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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):

September 30, 2024

March 31, 2025

December 31, 2024

Note receivable, noncurrent

Deferred consideration from divestiture

Deferred consideration from divestitures

Senior unsecured promissory note

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.

The fair value of the note receivable, including accrued interest, and the deferred consideration resulting from the AutoSense Divestiture and the Perceive Transaction (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.

They are classified within Level 2 of the fair value hierarchy.

The fair value of the Company’s debt (as described in Note 8— Debt) was 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.

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

Debt is classified within Level 2 of the fair value hierarchy.

As of December 31, 2024, short-term debt included the senior unsecured promissory note.

The carrying amount of the senior unsecured promissory note approximated fair value due to its short-term maturity.

As of March 31, 2025, long-term debt included the AR Facility with a floating interest rate based on market conditions.

The carrying amount of the AR Facility approximates fair value.

Refer to Note 8— Debt and Receivables Securitization for additional information on these two debt instruments.

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”).

In August 2024, the Company and one of its former subsidiaries, Perceive (“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 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 in October 2024.

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

Holdback Consideration

Upon completion of the Perceive Transaction, the holdback consideration of $ 12.0 million was estimated to have a then present value of $ 11.3 million, resulting in a discount of $ 0.7 million.

For the three months ended March 31, 2025, the amount of discount accreted as interest income was insignificant.

As of March 31, 2025, the net carrying amount of the holdback consideration is as follows (in thousands):

March 31, 2025

Holdback consideration

unamortized discount on holdback consideration

Net carrying amount

AutoSense In-cabin Safety Business and Related Imaging Solutions

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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.

In January 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.

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Net assets held for sale

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

Upon the completion of the AutoSense Divestiture, the Company recognized a pre-tax gain of $ 22.9 million.

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.

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The Company elected to present accrued interest within the carrying amount of note receivable, noncurrent, in the condensed consolidated balance sheets.

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

September 30, 2024

As of March 31, 2025, the carrying amount of the Tobii Note is as follows (in thousands):

March 31, 2025

Outstanding principal amount

1 unchanged sentence

Carrying amount—note receivable, noncurrent

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

For the three months ended March 31, 2025 and 2024, the Company recognized interest income of $ 0.6 million and $ 0.4 million, respectively.

Deferred Consideration

6 unchanged sentences

Total future payments

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

At the closing date of the Tobii 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 months ended March 31, 2025 and 2024, the Company accreted $ 0.3 million and $ 0.2 million of the discount as interest income, respectively.

As of March 31, 2025, the net carrying amount of the deferred consideration is as follows (in thousands):

March 31, 2025

Total deferred consideration

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

September 30, 2024

March 31, 2025

Weighted-Average Remaining Useful Life

Net Carrying Value

10 unchanged sentences

December 31, 2024

Weighted-Average Remaining Useful Life

Net Carrying Value

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Total intangible assets

(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):

A s of March 31, 2025, the estimated future amortization expense of total finite-lived intangible assets was as follows (in thousands):

Year Ending December 31:

1 unchanged sentence

Total future amortization

NOTE 8 – DEBT

NOTE 8 – DEBT AND RECEIVABLES SECURITIZATION

PNC AR Facility

In February 2025, the Company entered into a Receivables Financing Agreement (the “RFA”) to establish an accounts receivable securitization program (the “AR Facility”) with PNC Bank (“PNC”).

Under the AR Facility, certain of the Company’s wholly-owned subsidiaries (collectively, the “Originators”) agreed to periodically transfer and sell their trade receivables, which include accounts receivable and unbilled contracts receivable, and all related rights to Xperi SPV LLC (“Xperi SPV”), the Company’s wholly-owned special purpose subsidiary, while the Company manages the associated collection and administrative responsibilities.

In turn, Xperi SPV may borrow funds from PNC from time to time, secured by liens on the trade receivables.

The Company controls Xperi SPV and includes it in the Company’s condensed consolidated financial statements.

The transfer of the trade receivables is accounted for as a sale of financial assets.

Once sold to Xperi SPV, the Originators have no continuing involvement in the transferred trade receivables.

Further, the transferred trade receivables are no longer available to satisfy any outstanding debt owed to creditors of the Company or the Originators.

The maximum amount potentially available to borrow, based on the eligibility of the trade receivables, is $ 55.0 million.

Interest on the outstanding balance is accrued at the sum of the (i) monthly Term SOFR Rate (as defined in the RFA) and (ii) 1.90 %.

Additional interest of 0.50 % is accrued on the unused borrowing limit.

Interest is payable on a monthly basis.

The AR Facility matures on February 21, 2028, unless terminated earlier pursuant to its terms.

Repayment of the outstanding principal is due at maturity;

however, the Company may prepay all of the outstanding principal at any time, plus accrued and unpaid interest, without any premium or penalty.

If, at any time, the aggregate outstanding principal exceeds the eligibility limit of the receivables, the Company is required to repay the excess amount borrowed immediately.

The AR Facility contains customary covenants included in debt arrangements, and certain liquidity and related covenants involving various types of financial performance measures such as liquidity ratio, default ratio, dilution ratio, delinquency ratio, and days sales outstanding.

Subject in some cases to cure periods, amounts outstanding under the RFA may be accelerated for customary events of default including, but not limited to, the failure to make payments or deposits when due, borrowing base deficiencies, and the failure to observe or comply with any covenant.

The Company was in compliance with all covenants as of March 31, 2025.

On February 21, 2025, the Company borrowed $ 40.0 million under the AR Facility and accounted for it as a secured borrowing.

As of March 31, 2025, accounts receivable and unbilled contracts receivable totaling $ 124.4 million were included in the balance sheet of Xperi SPV and pledged as collateral against the borrowing.

The Company capitalized fees incurred to establish the securitization program of $ 1.2 million, which are amortized on a straight-line basis over the commitment term of three years .

Fees amortized are recognized under “interest expense – debt” in the condensed consolidated statements of operations.

Vewd Promissory Note

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, the Company issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in a principal amount of $ 50.0 million.

Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00 % per annum, payable in cash on a quarterly basis.

If a certain qualified spin-off transaction occurs, the interest rate will be increased to the greater of (a) 6.00 % and (b) the sum of (i) the highest interest rate payable under any credit facility or bonds, debentures, notes or similar instruments where the issuer or any guarantor borrows money or guarantees obligations on a secured basis on or after the date of such spin-off transaction, plus (ii) 2.00 %.

It was determined that the Spin-Off completed on October 1, 2022 did not trigger any change in the interest rate of the debt.

The Promissory Note matures on July 1, 2025 .

The Company may, at any time and on any one or more occasions, prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty.

In addition, the Promissory Note has mandatory prepayment provisions upon certain change of control or asset sale events.

The Promissory Note includes certain covenants that restrict the Company and each guarantor’s ability to, among other things, incur certain indebtedness or engage in any material line of business substantially different from those lines of business conducted by the Company on the closing date of the acquisition.

The Promissory Note does not contain any financial covenants.

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.

The Promissory Note was scheduled to mature on July 1, 2025 , but the Company was permitted to prepay all of the outstanding principal at any time, plus accrued and unpaid interest, without any premium or penalty.

The outstanding principal of $ 50.0 million on the Promissory Note was classified as current as of December 31, 2024.

In February 2025, the Company repaid the full outstanding principal along with accrued interest, with $ 40.0 million in loan proceeds from the AR Facility with PNC (as described above) and the remainder with cash on hand.

Total interest expense for debt was $ 0.7 million for the three months ended March 31 , 2025 and 2024.

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Net loss attributable to the Company - basic and diluted

Weighted-average number of shares used to compute net loss per share attributable to the Company - basic and diluted

Weighted-average number of shares used in computing net loss per share attributable to the Company - basic and diluted

Net loss per share attributable to the Company - basic and diluted

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 Nine Months Ended September 30,

Three Months Ended March 31,

Stock options

Restricted stock units

4 unchanged sentences

Under the 2022 EIP, the Company may grant equity-based awards to employees, non-employee directors, and consultants for services rendered to the Company (or any parent or subsidiary) in the form of stock options, stock awards, restricted stock awards, RSUs, stock appreciation rights, dividend equivalents and performance awards, or any combination thereof.

The 2022 EIP includes an automatic annual increase to its share reserve on January 1 of each year as set forth in the plan document.

The 2022 EIP provides for option grants designated as either incentive stock options or non-statutory options.

Stock options have been granted with an exercise price not less than the value of the common stock on the grant date, and have 10-year contractual terms from the date of grant, and vest over a four-year period.

Stock options have been granted with an exercise price not less than the value of the common stock on the grant date, have 10-year contractual terms from the date of grant, and vest over a four-year period.

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

As of March 31, 2025 , there were approximately 4.3 million shares reserved for future grants under the 2022 EIP.

Employee Stock Purchase Plans

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The purchase price per share will equal 85 % of the fair market value per share on the start date of the offering period or, if lower, 85 % of the fair market value per share on the semi-annual purchase date.

The 2022 ESPP includes a reset provision if the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of the 12 -month offering period.

The 2022 ESPP includes a reset provision which is triggered if the fair market value per share of the Company’s common stock on any purchase date during an offering period is less than the fair market value per share on the start date of the 12 -month offering period.

Upon occurrence of the reset, the existing offering period will automatically terminate and a new 12 -month offering period will begin on the next business day.

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

The reset provision under the 2022 ESPP was triggered on May 31, 2024, and it was considered a modification in accordance with ASC 718— Stock Based Compensation , with the incremental fair value of $ 2.0 million to be recognized on a straight-line basis over the new 12 -month offering period.

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 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:

Nine Months Ended September 30,

Expected life (years)

Risk-free interest rate

5.14 % — 5.39 %

4.33 % — 5.44 %

Dividend yield

Expected volatility

44.38 % — 45.01 %

44.11 % — 51.19 %

As of March 31, 2025, there were 2.6 million shares reserved for future issuance under the 2022 ESPP.

Stock Options

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

Options exercised

Options canceled / forfeited / expired

Balance at September 30, 2024

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

The Company did not grant additional stock options during the three months ended March 31, 2025.

All outstanding stock options were fully vested and exercisable as March 31, 2025, but were immaterial for financial statement disclosure purposes.

Restricted Stock Units

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):

Information with respect to outstanding RSUs (including both time-based vesting and performance-based vesting) for the three months ended March 31, 2025 is as follows (in thousands, except per share amounts):

based Vesting

3 unchanged sentences

Canceled / forfeited

Balance at September 30, 2024

Balance at March 31, 2025

Performance-Based Awards

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

Nine Months Ended September 30,

Three Months Ended March 31,

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 nine months ended September 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Total stock-based compensation expense for the three months ended March 31, 2025 and 2024 is as follows (in thousands):

Three Months Ended March 31,

Cost of revenue, excluding depreciation and amortization of intangible assets

2 unchanged sentences

Total stock-based compensation expense

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,

Stock-based compensation expense categorized by award type for the three months ended March 31, 2025 and 2024 is summarized in the table below (in thousands):

Three Months Ended March 31,

Total stock-based compensation expense

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

As of March 31, 2025, unrecognized stock-based compensation expense related to unvested equity-based awards is as follows (amounts in thousands):

March 31, 2025

Unrecognized Stock-Based Compensation

2 unchanged sentences

NOTE 11 – INCOME TAXES

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 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.

For the three months ended March 31, 2025, the Company recorded an income tax expense of $ 3.5 million on a pretax loss of $ 14.9 million, which resulted in an effective tax rate of ( 23.5 )%.

The income tax expense for the three months ended March 31, 2025 was primarily related to foreign withholding taxes and foreign income taxes.

For the three months ended March 31, 2024, the Company recorded an income tax expense of $ 4.3 million on a pretax loss of $ 9.1 million, which resulted in an effective tax rate of ( 47.0 )%.

The income tax expense for the three months ended March 31, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

federal income taxes, and state income taxes.

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.

As of March 31, 2025 , gross unrecognized tax benefits of $ 15.3 million decreased by $ 0.1 million compared to December 31, 2024.

Of the $ 15.3 million gross unrecognized tax benefits, $ 1.1 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.

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.

Recognition of interest and penalties related to unrecognized tax benefits was immaterial for the three months ended March 31, 2025 and 2024.

As of March 31, 2025 and December 31, 2024, accrued interest and penalties were $ 0.2 million and $ 0.1 million, respectively.

As of March 31, 2025 , the Company’s 2020 through 2025 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.

11 unchanged sentences

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 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Fixed lease cost (1)

4 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cash payments included in the measurement of operating lease liabilities

1 unchanged sentence

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:

September 30, 2024

March 31, 2025

December 31, 2024

1 unchanged sentence

Weighted-average discount rate

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

Future minimum lease payments and related lease liabilities as of March 31, 2025 were as follows (in thousands):

Year Ending December 31:

13 unchanged sentences

These arrangements primarily include unconditional purchase obligations to service providers.

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

As of March 31, 2025, the Company’s total future unconditional purchase obligations were approximately $ 133.0 million.

Indemnifications

11 unchanged sentences

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.

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

The maximum 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.

7 unchanged sentences

Although considerable uncertainty exists, the Company does not anticipate that the disposition of any of these matters will have a material effect on its business or consolidated financial statements.

NO TE 14 – SUBSEQUENT EVENTS

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.

NOTE 14 - SEGMENT RELATED INFORMATION

The Company has one operating and reportable segment.

The Company’s technologies are integrated into consumer devices and media platforms worldwide, powering smart devices, connected cars and entertainment experiences.

The Company’s Chief Executive Officer has been determined to be the chief operating decision maker (“CODM”) in accordance with the authoritative guidance on segment reporting.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance and decides how to allocate resources based on net income (loss) that also is reported on the statements of operations as consolidated net income (loss).

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The following table presents information about reported segment revenue, significant segment expenses, and segment net loss for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Cost of revenue, excluding depreciation and amortization of intangible assets (1)

Research and development (1)

Selling, general and administrative (1)

Depreciation expense

Amortization expense

Interest and other income, net

Interest expense - debt

Gain on divestitures

Provision for income taxes

Consolidated net loss

(1) Includes total salaries, bonuses, and employee benefits of $ 68.5 million and $ 77.6 million for the three months ended March 31, 2025 and 2024, respectively.

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