TiVo Parent Xperi Raises 2020 Guidance After Comcast Litigation Settlement
Xperi raised revenue guidance for the rest of the year, after its settlement with Comcast of longstanding litigation over its TiVo patent portfolio. The companies signed a 15-year licensing program for pay TV, dating to the expiration of their prior agreement, that supports Xperi’s core pay-TV licensing program revenue through early 2031, said CEO Jon Kirchner on a Q3 investor call Monday.
Xperi raised second-half guidance to $625 million-$645 million from $390 million-$410 million. Xperi posted Q3 revenue of $202.8 million for the quarter ended Sept. 30. Though end markets are beginning to show signs of recovery, Xperi remains “cautious” about the pace of recovery in 2021, Kirchner said. Shares surged 24% Tuesday to close at $17.32.
The 15-year Comcast agreement contributes to a higher-than-expected annual revenue baseline for Xperi’s IP business, about $350 million starting next year, said Kirchner. The agreement illustrates TiVo’s ability to execute key renewals with large customers in the video market amid “significant technological and business evolution” and will have a positive impact on other licensing outcomes, he predicted.
TiVo Stream 4K is now selling through Walmart and Amazon, and Xperi launched partner promotion and distribution with broadband operators for the streaming device, Kirchner said. TiVo+ added Pluto TV, Tubi, Xumo and Locast; its portfolio has 144 core channels and up to 200 channels in major markets.
On progress of phase two of TiVo Stream 4K -- embedding the technology in smart TVs -- Kirchner deferred to Q2 2021 for visibility on manufacturer plans for second half next year. He referenced “productive discussions on not only the technical issues of porting the code stack into the embedded space but also just talking about how we can basically drive a platform that looks a little bit different in terms of the overall ecosystem and what's out there currently for TV manufacturers.” The TiVo “content-first” approach to the user experience is getting “very, very good feedback.”
Hisense joined the Imax Enhanced program for its 4K OLED TVs in China, where Imax has a strong cinema presence, said Kirchner. Philips announced the first Imax-Enhanced sound bar, becoming the 19th brand in the ecosystem.
Kirchner hailed the FCC’s recent approval of all-digital AM broadcasting (see 2010230064), saying it builds on the existing broadcast standard for Xperi technology and further encourages receiver makers to incorporate HD Radio. During the quarter, HD Radio launched in North America on 14 new 2020 car models. Mercedes-Benz added the hybrid IP/linear Connected Radio to the S-Class infotainment system.
Revenue in the Connected Car category declined 5.8% to $18.5 million due to lower production during the pandemic. Kirchner referenced signs the automotive market is starting to recover and said a recovery in HD Radio shipments will track market trends. He cited car sales projections indicating a 9% recovery next year.
Xperi’s pay-TV business was down 6% sequentially to $55.6 million despite the launch of next-generation TiVo platforms on Liberty Latin America, Midco, MetroNet and RCN. The new TiVo platform has more monetization potential than older pay-TV platforms, Kirchner said, but the pace of household conversion in Q3 was held back by COVID-19-related restrictions.