What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 102 added, 109 removed, 94 unchanged (69% of the section changed)

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The following discussion and analysis is intended to promote understanding of our results of operations and financial condition and should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the fiscal year ended December 31, 2024 found in our Form 10-K filed by Xperi Inc.

on March 1, 2024 (our “Form 10-K”).

on February 27, 2025 (our “Form 10-K”).

Business Overview

We are a leading consumer and entertainment technology company.

We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, enabling audiences to connect with content in a way that is more intelligent, immersive, and personal.

We believe we create extraordinary experiences at home and on the go for millions of consumers around the world, enabling our unique audiences to connect with content in a more intelligent, immersive, and personal way.

Powering smart devices, connected cars, entertainment experiences and more, we bring together ecosystems designed to reach highly-engaged consumers, allowing us and our ecosystem partners to uncover significant new business opportunities, now and in the future.

Our technologies are integrated into consumer devices and a variety of media platforms worldwide, driving increased value for our partners, customers, and consumers.

We operate in one reportable business segment and group our business into four categories:

We operate in one reportable business segment and group our revenue into four categories:

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

Headquartered in Silicon Valley with operations around the world, we have approximately 1,620 employees and more than 35 years of operating experience.

In December 2023, we entered into a definitive agreement with Tobii AB (“Tobii”), an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “Auto-Sense Divestiture”).

The AutoSense Divestiture was completed in January 2024, which has streamlined our business and further enhanced our focus on entertainment markets.

In August 2024, we entered into an Asset Purchase Agreement with Amazon.com Services LLC (the “Buyer”) to sell substantially all of the assets and certain liabilities of Perceive Corporation (now known as Xperi Pylon Corporation) (the “Seller”), a subsidiary focused on edge inference hardware and software technologies, for a gross amount of $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction (the “Perceive Transaction”) to secure our and the Seller’s indemnification obligations.

The Perceive Transaction was completed on October 2, 2024.

We expect net proceeds from the Perceive Transaction to be approximately $60.0 million after taxes, closing costs, and fees, inclusive of the holdback described above.

Refer to Note 14— Subsequent Events for additional information.

The AutoSense Divestiture was completed in January 2024 and has streamlined our business and further enhanced our focus on entertainment markets.

In August 2024, we entered into an Asset Purchase Agreement with Amazon.com Services LLC to sell substantially all of the assets and certain liabilities of Perceive Corporation (later known as Xperi Pylon Corporation and subsequently dissolved in December 2024), a subsidiary focused on edge inference hardware and software technologies, for a gross amount of $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction (the “Perceive Transaction”) to secure our and Perceive Corporation’s indemnification obligations.

The Perceive Transaction was completed in October 2024, allowing us to be fully focused on entertainment-based solutions to grow our independent media platform and licensing businesses.

Results of Operations

The following table presents our historical operating results for the periods indicated as a percentage of revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

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Amortization expense

Impairment of long-lived assets

Total operating expenses

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Provision for income taxes

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Comparison of the Three Months Ended March 31, 2025 and 2024

We derive the majority of our revenue from licensing our technologies and solutions to customers.

For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 2— Revenue of the Notes to the Condensed Consolidated Financial Statements (Unaudited).

Three Months Ended September 30,

(dollars in thousands)

Revenue increased by $2.5 million, or 2%, for the three months ended September 30, 2024 compared to the same period in the prior year.

The increase was primarily attributable to an increase of $21.4 million in Pay-TV revenue, driven largely by higher core guide product revenue due to the timing and duration of minimum guarantee (“MG”) contracts that were executed and continued growth in IPTV Solutions revenue, partially offset by declines in consumer hardware and subscription revenue, and an increase of $2.1 million in Connected Car revenue driven principally by increases in Audio Solutions and AutoStage revenue, partially offset by the impact of the AutoSense Divestiture.

These increases were partially offset by a decrease of $15.4 million in Consumer Electronics revenue resulting from declines in MG contract revenue and market-based softness in certain end products, and a decrease of $5.6 million in Media Platform middleware solutions revenue primarily due to the timing and duration of MG contracts that were renewed in the third quarter of 2023.

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands)

Revenue decreased by $12.8 million, or 3%, for the nine months ended September 30, 2024 compared to the same period in the prior year.

The decrease was primarily attributable to a decline of $40.6 million in Consumer Electronics revenue due to the AutoSense Divestiture as well as fewer MG revenue contracts due to the timing and duration of MG contracts up for renewal, and a decrease of $6.8 million in Media Platform revenue driven principally by lower advertising revenue associated with our core Pay-TV products and lower MG revenue from our middleware solutions platform.

These decreases were partially offset by an increase of $20.6 million in Pay-TV revenue driven largely by higher MG revenue in core guide products and continued growth in IPTV Solutions revenue, and an increase of $14.0 million in Connected Car revenue as a result of higher Audio Solutions and AutoStage revenue, coupled with settlements executed, all of which was partially offset by the impact of the AutoSense Divestiture, during the first nine months of 2024.

Revenue decreased by $4.8 million, or 4%, for the three months ended March 31, 2025 compared to the same period in the prior year.

The decrease was primarily attributable to decreases of $13.8 million in Pay-TV, Media Platform, and Consumer Electronics revenue, partially offset by an increase of $9.0 million in Connected Car revenue.

Pay-TV revenue decreased by $6.9 million compared to the first quarter of 2024 due to declines in core guide products and consumer hardware and subscription revenue partially due to certain minimum guarantee (“MG”) revenue that occurred during the first quarter of 2024, which was partially offset by continued increases in IPTV solutions revenue.

Our Media Platform revenue declined by $3.5 million due to reductions in middleware solutions revenue and advertising revenue associated with third-party advertising inventory.

In addition, Consumer Electronics revenue decreased by $3.3 million driven by the absence of revenue in the first quarter of 2025 from the divestitures of both Perceive and imaging products related to AutoSense, and market-based softness of certain end products, partially offset by multi-year renewals.

These decreases were partially offset by the increase in Connected Car revenue as a result of MG revenue from HD Radio partially offset by the impact of the AutoSense Divestiture.

Operating Expenses

Three Months Ended September 30,

(dollars in thousands)

Cost of revenue, excluding depreciation and amortization of intangible assets

Research and development

Selling, general and administrative

Depreciation expense

Amortization expense

Total operating expenses

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands)

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Amortization expense

Impairment of long-lived assets

Total operating expenses

Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, content costs, hosting fees, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings, and non-recurring engineering (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended September 30, 2024 was $27.5 million, as compared to $26.4 million in the same period of the prior year, an increase of $1.1 million, or 4%.

The increase was primarily attributable to increases in Media Platform costs in the third quarter of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the nine months ended September 30, 2024 was $86.2 million, as compared to $85.1 million in the same period of the prior year, an increase of $1.1 million, or 1%.

The increase was primarily attributable to higher delivery costs related to an increase in NRE revenue as well as an increase in Media Platform costs, partially offset by lower costs incurred in connection with advertising revenue in the first nine months of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, content and data costs, hosting fees, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings and non-recurring engineering (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended March 31, 2025 was $29.6 million, as compared to $29.8 million in the same period of the prior year, a decrease of $0.2 million, or 1%.

This decrease was primarily attributable to lower costs resulting from the AutoSense Divestiture and the Perceive Transaction, both of which took place in 2024.

Research and Development

Research and development expenses consist primarily of employee-related costs, stock-based compensation expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs.

Research and development (“R&D”) costs consist primarily of employee-related costs, stock-based compensation (“SBC”) expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs.

Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.

Research and development expense for the three months ended September 30, 2024 was $53.6 million, as compared to $56.4 million in the same period of the prior year, a decrease of $2.8 million, or 5%.

The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture, a reduction in expenses related to the Perceive subsidiary, decreases in stock-based compensation and bonus expenses, and an increase in capitalized costs for internal-use software in the third quarter of 2024.

These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction as well as severance charges incurred during the third quarter of 2024.

Research and development expense for the nine months ended September 30, 2024 was $149.2 million, as compared to $167.0 million in the same period of the prior year, a decrease of $17.8 million, or 11%.

These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction and severance charges incurred during the first nine months of 2024.

Research and development expense for the three months ended March 31, 2025 was $39.5 million, as compared to $50.4 million in the same period of the prior year, a decrease of $10.9 million, or 22%.

The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture, lower expenses resulting from the Perceive Transaction as well as reductions in R&D employee headcount.

Selling, General and Administrative

Selling expenses consist primarily of compensation and related costs (including stock-based compensation expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade show expenses.

General and administrative expenses consist primarily of compensation and related costs

(including stock-based compensation expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services.

Selling expenses consist primarily of compensation and related costs (including SBC expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade shows.

General and administrative expenses consist primarily of compensation and related costs (including SBC expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services.

Our general and administrative expenses, other than facilities-related expenses and fringe benefits, are not allocated to other expense line items.

Selling, general and administrative expenses for the three months ended September 30, 2024 were $56.5 million, as compared to $59.6 million in the same period of the prior year, a decrease of $3.1 million, or 5%.

The decrease was primarily attributable to reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs related to the Perceive Transaction in the third quarter of 2024.

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $165.9 million, as compared to $173.9 million in the same period of the prior year, a decrease of $8.0 million, or 5%.

The decrease was primarily attributable to reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs primarily related to the AutoSense Divestiture and the Perceive Transaction in the first nine months of 2024.

Selling, general and administrative expenses for the three months ended March 31, 2025 were $48.7 million, as compared to $56.4 million in the same period of the prior year, a decrease of $7.7 million, or 14%.

The decrease was primarily attributable to reduced employee headcount as well as a decrease in SBC expense.

Stock-based Compensation

The following table sets forth our stock-based compensation expense for the 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 sets forth our SBC expense 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

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Total stock-based compensation expense

We recognized stock-based compensation expense from restricted stock units and purchases made under our employee stock purchase plan.

Stock-based compensation expense decreased by $2.4 million and $6.4 million, or 13% and 12%, for the three and nine months ended September 30, 2024 compared to the same periods of the prior year, respectively.

The decreases were primarily driven by lower expense for performance-based restricted stock units, and reduced employee headcount during each of the three and nine months ended September 30, 2024.

We recognized SBC expense from restricted stock units and purchases made under our employee stock purchase plan (“ESPP”).

The decrease of $2.7 million in SBC expense for the three months ended March 31, 2025, when compared to the same period of the prior year, was primarily driven by lower expense for performance-based restricted stock units and reduced employee headcount.

Depreciation Expense

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements.

Depreciation expense for the three months ended September 30, 2024 was $2.9 million, as compared to $4.2 million in the same period of the prior year, a decrease of $1.3 million, or 31%.

The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

Depreciation expense for the nine months ended September 30, 2024 was $9.8 million, as compared to $12.5 million in the same period of the prior year, a decrease of $2.7 million, or 22%.

Depreciation expense for the three months ended March 31, 2025 was $2.9 million, as compared to $3.6 million in the same period of the prior year, a decrease of $0.7 million, or 19%.

The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

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We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill.

Amortization expense for the three months ended September 30, 2024 was $10.9 million, as compared to $14.7 million in the same period of the prior year, a decrease of $3.8 million, or 26%.

The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

Amortization expense for the nine months ended September 30, 2024 was $33.0 million, as compared to $44.3 million in the same period of the prior year, a decrease of $11.3 million, or 26%.

Amortization expense for the three months ended March 31, 2025 was $9.7 million, as compared to $11.0 million in the same period of the prior year, a decrease of $1.3 million, or 12%.

The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

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See Note 7— Intangible Assets, Net of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional detail.

Impairment of Long-Lived Assets

As a result of optimizing our global real estate footprint and subleasing certain offices following the Spin-Off (as defined in Note 1— Description Of Business And Summary Of Significant Accounting Policies ), we recorded non-cash impairment charges of $0 and $1.1 million to reduce the carrying amount of certain operating lease right-of-use (“ROU”) assets and property and equipment, including related leasehold improvements, during the three and nine months ended September 30, 2023, respectively.

We determined that we may not be able to fully recover the carrying amount of the leased offices due to how the offices were being used, a significant decrease in the expected market price of the ROU assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate leasing market.

We did not record any asset impairment charge for the three and nine months ended September 30, 2024.

Interest and Other Income, Net

Three Months Ended March 31,

(dollars in thousands)

Interest and other income, net

Interest and other income, net, was higher in the three months ended March 31, 2025, as compared to the same period in the prior year, principally due to an increase in foreign currency transaction gains.

Interest Expense—Debt

Three Months Ended March 31,

(dollars in thousands)

Interest expense - debt

The interest expense on debt was $0.7 million in the three months ended March 31, 2025 and remained constant when compared to the same period in the prior year.

Gain on Divestiture

As previously disclosed, we completed the AutoSense Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets.

Upon the completion of the AutoSense Divestiture, we recognized a gain of $22.9 million in the nine months ended September 30, 2024.

Refer to Note 6— Divestitures of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

We did not recognize any gain on divestiture in the nine months ended September 30, 2023.

Three Months Ended March 31,

(dollars in thousands)

Gain on divestiture

As disclosed in Note 6— Divestitures of the Notes to the Condensed Consolidated Financial Statements (Unaudited), we completed the AutoSense Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets.

Upon the completion of the AutoSense Divestiture, we recognized a pre-tax gain of $22.9 million during the three months ended March 31, 2024.

We did not have any divestitures during the three months ended March 31, 2025.

Provision for Income Taxes

For the three and nine months ended September 30, 2024, we 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, we 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, we 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, we 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.

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In making such assessment, significant weight is given to evidence that can be objectively verified.

After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that it was unlikely that we would realize our federal, certain state and certain foreign deferred tax assets given the substantial amount of tax attributes that will remain unutilized to offset reversing deferred tax liabilities.

We intend to continue maintaining a full valuation allowance on our federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded.

After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that it was unlikely that our federal, certain state, and certain foreign deferred tax assets with valuation allowances will be realized.

For jurisdictions that currently have valuation allowances, we intend to maintain valuation allowances until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

The exact timing and amount of the valuation allowance release depends on the level of profitability that we are able to achieve.

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The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the periods presented:

September 30, 2024

March 31, 2025

December 31, 2024

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Current ratio (1)

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

(1) The current ratio is a liquidity ratio that measures our ability to pay short-term obligations or those due within one year.

The ratio is calculated by dividing current assets by current liabilities.

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Net cash used in investing activities

Net cash (used in) provided by financing activities

Our primary liquidity and capital resources are our cash and cash equivalents on hand.

Cash and cash equivalents were $72.7 million at September 30, 2024, a decrease of $81.7 million from $154.4 million, including $12.3 million classified as held for sale in connection with the AutoSense Divestiture, as of December 31, 2023.

This decrease resulted primarily from cash used in operations of $56.6 million, $10.0 million in repurchases of common stock, $6.6 million in payments of withholding taxes on net share settlement of equity awards and $12.4 million of capital expenditures, including capitalized internal-use software costs, offset by $4.3 million in proceeds from the issuance of common stock under our employee stock purchase plan (“ESPP”).

In addition, in October 2024, we completed the Perceive Transaction and received a cash payment of $68.0 million from the Buyer.

Net cash used in financing activities

Our primary liquidity and capital resources are our cash and cash equivalents on hand and borrowings under the AR Facility (defined below).

Cash and cash equivalents were $88.0 million at March 31, 2025, a decrease of $42.6 million from $130.6 million at December 31, 2024.

This decrease resulted primarily from cash used in operations of $22.3 million, $50.0 million in voluntary repayment of the Vewd Software Holdings Limited (“Vewd”) senior unsecured promissory note, $5.3 million in payments of withholding taxes on net share settlement of equity awards, and $4.2 million of capital expenditures, including capitalized internal-use software costs, partially offset by $40.0 million in loan proceeds borrowed under an accounts receivable securitization program (the “AR Facility”) with PNC Bank, National Association (“PNC”).

For detailed information regarding the repayment of the Vewd debt and the AR Facility, refer to “ Long-Term Debt Financing ” below.

For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Form 10-K.

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We 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, we repurchased a total of approximately 1.1 million shares of common stock at an average price of $8.92 per share for a total cost of $10.0 million.

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

We expect to continue to fund the repurchase program from cash and cash equivalents, including from the net proceeds of the Perceive Transaction.

Repurchases under the Program may not enhance the value of our common stock.

As of March 31, 2025, we have repurchased a total of approximately 2.2 million shares of common stock, since inception of the Program, at an average price of $9.23 per share for a total cost of approximately $20.0 million.

We did not repurchase any common stock during the three months ended March 31, 2025.

As of March 31, 2025, the total remaining amount available for repurchase was $80.0 million.

We may continue to execute authorized repurchases from time to time under the Program.

There is no guarantee that such repurchases under the Program will enhance the value of our common stock.

Cash Flows from Operating Activities

Net cash used in operating activities was $56.6 million for the nine months ended September 30, 2024, primarily due to our net loss of $63.8 million being further adjusted by $55.6 million of changes in operating assets and liabilities driven principally by an increase of $43.5 million in unbilled contracts receivable, and $22.9 million of a non-cash gain recognized from the AutoSense Divestiture, partially offset by non-cash items such as stock-based compensation expense of $45.3 million, amortization of intangible assets of $33.0 million, and depreciation expense of $9.8 million.

Net cash used in operating activities was $20.6 million for the nine months ended September 30, 2023, primarily due to our net loss of $114.4 million being further adjusted by $14.7 million of changes in operating assets and liabilities, partially offset by non-cash items such as depreciation expense of $12.5 million, amortization of intangible assets of $44.3 million, stock-based compensation expense of $51.7 million, and an asset impairment charge of $1.1 million.

Net cash used in operating activities was $22.3 million for the three months ended March 31, 2025, primarily due to our net loss of $18.4 million being further adjusted by $28.4 million of changes in operating assets and liabilities, including payment during the quarter of employee annual bonuses for 2024 performance, partially offset by non-cash items such as SBC expense of $12.1 million, amortization of intangible assets of $9.7 million, and depreciation expense of $2.9 million.

Net cash used in operating activities was $49.8 million for the three months ended March 31, 2024, primarily due to our net loss of $13.4 million being further adjusted by $43.4 million of changes in operating assets and liabilities, including payment during the quarter of employee annual bonuses for 2023 performance, and $22.9 million of a non-cash gain recognized from the

AutoSense Divestiture, partially offset by non-cash items such as SBC expense of $14.8 million, amortization of intangible assets of $11.0 million, and depreciation expense of $3.6 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $12.9 million and $9.6 million for nine months ended September 30, 2024 and 2023, respectively, which was primarily related to capital expenditures, including capitalized internal-use software.

Net cash used in investing activities was $4.2 million and $4.7 million for three months ended March 31, 2025 and 2024, respectively, which was primarily related to capital expenditures, including capitalized internal-use software.

Capital Expenditures

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Cash Flows from Financing Activities

Net cash used in financing activities was $12.3 million for the nine months ended September 30, 2024, due to $10.0 million in repurchases of common stock under the Program and $6.6 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $4.3 million in proceeds from the issuance of common stock under our ESPP.

Net cash provided by financing activities was $1.5 million for the nine months ended September 30, 2023, due to $5.9 million in proceeds from the issuance of common stock under our ESPP, partially offset by the payment of $4.4 million in withholding taxes related to net share settlement of equity awards.

Short-Term Debt

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, of which $50.0 million was outstanding at September 30, 2024.

Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to potential adjustments as described in Note 8— Debt to the Condensed Consolidated Financial Statements included in this Quarterly Report.

The Promissory Note matures on July 1, 2025.

Net cash used in financing activities was $16.1 million for the three months ended March 31, 2025, primarily due to $5.3 million in payment of withholding taxes related to net share settlement of equity awards, and the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note, partially offset by $40.0 million in loan proceeds borrowed under the AR Facility with PNC.

Net cash used in financing activities was $4.7 million for the three months ended March 31, 2024, which reflected the payment of withholding taxes related to net share settlement of equity awards.

Long-Term Debt Financing

In connection with the acquisition of Vewd on July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, all of which was outstanding at December 31, 2024.

Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to certain potential adjustments.

The Promissory Note was scheduled to mature on July 1, 2025.

We 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.

Short-Term Liquidity/Financings

We believe our current cash and cash equivalents will be sufficient to meet our needs for at least the next 12 months from the issuance date of the Condensed Consolidated Financial Statements included in this Quarterly Report.

As the Promissory Note (see “Short-Term Debt”) matures on July 1, 2025, we expect to use a portion of the proceeds from the Perceive asset sale and may also access the capital markets for additional funding to make full payment on the maturity date.

As we assess growth strategies, we may need to supplement our cash and cash equivalents with outside sources.

As part of our liquidity strategy, we will continue to monitor our earnings and cash flow as well as our ability to access the capital markets in light of those levels.

On February 21, 2025, we voluntarily made a full principal payment of $50.0 million plus accrued interest by using a combination of cash on hand and a new long-term financing facility through the securitization of our accounts receivable as described below.

On February 21, 2025, we and Xperi SPV LLC (“Xperi SPV”), a wholly-owned special purpose subsidiary, entered into a Receivables Financing Agreement (the “RFA”) with PNC, and PNC Capital Markets LLC, and a Sale and Contribution Agreement (the “SCA,” and, together with the RFA, the “RF Agreements”) among us, Xperi SPV and certain of our other wholly-owned subsidiaries to establish an accounts receivable securitization program (the “AR Facility”).

Interest is payable on a monthly basis.

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

For a detailed description of the AR Facility, refer to Note 8— Debt and Receivables Securitization .

Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility and selected the monthly Term SOFR Rate (as defined in the RFA).

The RF Agreements contain various covenants that we believe are usual and customary.

The interest payments on the AR Facility debt, exclusive of the debt issuance costs and related amortization, are expected to be approximately $2.6 million for the next 12 months and may vary with changes in interest rates.

As of March 31, 2025, we were in compliance with the covenants under the RF Agreements.

For more information on our AR Facility, see Note 8— Debt and Receivables Securitization .

We believe our current cash and cash equivalents, together with borrowings or availability under our AR Facility, will be sufficient to meet our needs for at least the next 12 months from the issuance date of the Condensed Consolidated Financial Statements included in this Quarterly Report.

As we assess growth strategies, we may need to supplement our cash and cash equivalents with additional outside sources.

As part of our liquidity strategy, we will continue to monitor our earnings and cash flow as well as our ability to access the capital markets as needed.

Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect.

Equity or debt financing may not be available when needed or, if available, equity or debt financing may not be on terms satisfactory to us.

Equity or additional debt financing may not be available when needed or, if available, equity or debt financing may not be on terms satisfactory to us.

Additionally, disruption and volatility in the global capital markets and economic uncertainties, including those driven by tariffs, could impact our capital resources and liquidity in the future.

We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives.

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Critical Accounting Estimates

During the nine months ended September 30, 2024, there were no significant changes in our critical accounting estimates.

During the three months ended March 31, 2025, there were no significant changes in our critical accounting estimates.

For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

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Quantitative and Qualitati ve Disclosures About Market Risk.

There have been no material changes to our exposure to market risk since December 31, 2023.

Except as set forth below, there were no material changes to our exposure to market risk since December 31, 2024.

For a discussion of our market risk, see Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K.

Interest Rate Risk

We are exposed to changes in interest rates related to our Receivables Financing Agreement.

As of March 31, 2025, we had outstanding indebtedness in the amount of $40.0 million under the AR Facility that was subject to variable interest rates, based on the secured overnight financing rate (“SOFR”).

Changes in economic conditions outside of our control could result in higher interest rates, thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes.

Assuming no change in the outstanding indebtedness, we estimate that a 1% increase in the applicable SOFR interest rate would result in an annual increase in our interest expense of approximately $0.5 million.

Any significant increase in our interest expense could negatively impact our results of operations and cash flows.

Federal Reserve raises its benchmark interest rate, any increases would likely impact the borrowing rate on our outstanding indebtedness, and increase our interest expense, comparably.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis