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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-41486

XPERI INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		83-4470363
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2190 Gold Street, San Jose, California		95002
(Address of Principal Executive Offices)		(Zip Code)

(408) 519-9100

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock (par value $0.001 per share)

     XPER

     New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of October 28, 2025 was 46,335,385.

XPERI INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025

TABLE OF CONTENTS


		Page
	Note About Forward-Looking Statements	3

	PART I
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2025 and 2024	5
	Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	7
	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2025 and 2024	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

	PART II
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45

Signatures		46

Note About Forward-Looking Statements

This quarterly report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “will,” “intends,” “potentially,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, demand, acceptance and market share, growth rate, competitiveness, gross margins, costs of research, development and other related costs, expenditures, tax expenses, cash flows, our management’s plans and objectives for our current and future operations, the levels of customer spending or research and development activities, disaggregation of revenue, general economic conditions, risks related to new, increased, reciprocal or retaliatory tariffs, interest rate risks, the impact of any acquisitions or divestitures on our financial condition and results of operations, our repurchase program, promissory note and notes receivable, the expected net proceeds, and use thereof, from our Perceive asset sale transaction, impacts of tax reform, capital expenditure plans, the sufficiency of financial resources to support future operations and capital expenditures, and our restructuring plan and related charges, cost savings and other effects.

Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those discussed under the heading “Risk Factors” in our Form 10-K (as defined below) and other documents we file from time to time with the U.S. Securities and Exchange Commission (“SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	111,632		$	132,891		$	331,598		$	371,326
Operating expenses:
Cost of revenue, excluding depreciation and amortization of intangible assets		29,078			27,484			92,226			86,193
Research and development		29,923			53,627			99,255			149,189
Selling, general and administrative		42,536			56,483			132,376			165,938
Depreciation expense		3,470			2,918			9,823			9,780
Amortization expense		7,987			10,934			26,853			33,015
Total operating expenses		112,994			151,446			360,533			444,115
Operating loss		(1,362	)		(18,555	)		(28,935	)		(72,789	)
Interest and other income, net		821			2,379			4,863			4,711
Interest expense - debt		(761	)		(756	)		(2,252	)		(2,252	)
Gain on divestiture		—			—			—			22,934
Loss before taxes		(1,302	)		(16,932	)		(26,324	)		(47,396	)
Provision for income taxes		4,805			2,899			12,930			16,437
Net loss		(6,107	)		(19,831	)		(39,254	)		(63,833	)
Less: net loss attributable to noncontrolling interest		—			(3,026	)		—			(3,609	)
Net loss attributable to the Company	$	(6,107	)	$	(16,805	)	$	(39,254	)	$	(60,224	)
Net loss per share attributable to the Company - basic and diluted	$	(0.13	)	$	(0.37	)	$	(0.86	)	$	(1.33	)
Weighted-average number of shares used in computing net loss per share attributable to the Company - basic and diluted		46,276			45,683			45,637			45,180

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

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net loss	$	(6,107	)	$	(19,831	)	$	(39,254	)	$	(63,833	)
Other comprehensive income (losses):
Reclassification of foreign currency translation adjustments into net loss upon liquidation of foreign subsidiaries		—			—			45			—
Foreign currency translation adjustment		—			2			—			(323	)
Unrealized gain (loss) on cash flow hedges		(2,043	)		1,038			2,410			(149	)
Comprehensive loss		(8,150	)		(18,791	)		(36,799	)		(64,305	)
Less: comprehensive loss attributable to noncontrolling interest		—			(3,026	)		—			(3,609	)
Comprehensive loss attributable to the Company	$	(8,150	)	$	(15,765	)	$	(36,799	)	$	(60,696	)

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

XPERI INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)


	September 30, 2025			December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	96,784		$	130,564
Accounts receivable, net		56,823			58,745
Unbilled contracts receivable, net		78,159			83,075
Prepaid expenses and other current assets		29,547			32,488
Deferred consideration from divestiture		11,762			—
Total current assets		273,075			304,872
Note receivable, noncurrent		31,462			29,702
Deferred consideration from divestiture, noncurrent		7,693			18,217
Unbilled contracts receivable, noncurrent		62,720			45,396
Property and equipment, net		50,468			44,473
Operating lease right-of-use assets		31,038			30,082
Intangible assets, net		136,868			163,714
Deferred tax assets		7,825			7,228
Other noncurrent assets		27,670			24,076
Total assets	$	628,819		$	667,760
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	17,094		$	16,979
Accrued liabilities		78,197			94,420
Deferred revenue		17,756			23,950
Short-term debt		—			50,000
Total current liabilities		113,047			185,349
Long-term debt		40,000			—
Deferred revenue, noncurrent		16,589			20,932
Operating lease liabilities, noncurrent		23,497			19,932
Deferred tax liabilities		1,491			1,491
Other noncurrent liabilities		13,157			10,979
Total liabilities		207,781			238,683
Commitments and contingencies (Note 13)
Equity:
Preferred stock: $0.001 par value; 6,000 shares authorized as of September 30, 2025 and December 31, 2024; no shares issued and outstanding as of September 30, 2025 and December 31, 2024		—			—
Common stock: $0.001 par value; 140,000 shares authorized as of September 30, 2025 and December 31, 2024; 46,295 and 44,328 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		46			44
Additional paid-in capital		1,303,319			1,274,561
Accumulated other comprehensive loss		(3,629	)		(6,084	)
Accumulated deficit		(878,698	)		(839,444	)
Total equity		421,038			429,077
Total liabilities and equity	$	628,819		$	667,760

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

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(39,254	)	$	(63,833	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		32,069			45,309
Amortization of intangible assets		26,853			33,015
Depreciation of property and equipment		9,823			9,780
Accrued interest income from note receivable		(1,760	)		(1,455	)
Accretion of discount from deferred consideration from divestitures		(1,238	)		(676	)
Gain from divestiture		—			(22,934	)
Deferred income taxes		(597	)		66
Other		2,298			(279	)
Changes in operating assets and liabilities:
Accounts receivable		1,445			(8,554	)
Unbilled contracts receivable		(12,408	)		(43,518	)
Prepaid expenses and other assets		896			4,684
Accounts payable		(1,475	)		(328	)
Accrued and other liabilities		(10,730	)		(7,047	)
Deferred revenue		(10,537	)		(799	)
Net cash used in operating activities		(4,615	)		(56,569	)
Cash flows from investing activities:
Purchases of property and equipment		(2,439	)		(3,304	)
Capitalized internal-use software		(12,161	)		(9,175	)
Purchases of intangible assets		(7	)		(157	)
Net cash used in divestiture		—			(227	)
Net cash used in investing activities		(14,607	)		(12,863	)
Cash flows from financing activities:
Repayment of short-term debt		(50,000	)		—
Repurchases of common stock		—			(9,999	)
Withholding taxes related to net share settlement of equity awards		(6,624	)		(6,645	)
Payment of debt issuance costs		(1,249	)		—
Proceeds from long-term debt		40,000			—
Proceeds from issuance of common stock under employee stock purchase plan		3,315			4,328
Net cash used in financing activities		(14,558	)		(12,316	)
Net decrease in cash and cash equivalents		(33,780	)		(81,748	)
Cash and cash equivalents at beginning of period (1)		130,564			154,434
Cash and cash equivalents at end of period	$	96,784		$	72,686
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	7,303		$	12,254
Interest paid	$	1,788		$	2,252

(1)

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


	Nine Months Ended September 30,
	2025		2024
Supplemental disclosure of noncash investing and financing activities:
Costs capitalized for internal-use software included in accrued liabilities	$	208	$	515
Property and equipment included in accounts payable	$	2,106	$	134
Note receivable in exchange for consideration from divestiture	$	—	$	27,676
Deferred consideration from divestiture	$	—	$	5,854

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

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)


Three Months Ended September 30, 2025	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total
	Shares		Amount		Capital			Loss			Deficit			Equity
Balances at July 1, 2025		46,221	$	46	$	1,293,958		$	(1,586	)	$	(872,591	)	$	419,827
Vesting of restricted stock units, net of tax withholding		74		—		(279	)		—			—			(279	)
Stock-based compensation		—		—		9,640			—			—			9,640
Unrealized loss on cash flow hedges		—		—		—			(2,043	)		—			(2,043	)
Net loss		—		—		—			—			(6,107	)		(6,107	)
Balances at September 30, 2025		46,295	$	46	$	1,303,319		$	(3,629	)	$	(878,698	)	$	421,038


Nine Months Ended September 30, 2025	Common Stock				Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total
	Shares		Amount		Capital			Loss			Deficit			Equity
Balances at January 1, 2025		44,328	$	44	$	1,274,561		$	(6,084	)	$	(839,444	)	$	429,077
Vesting of restricted stock units, net of tax withholding		1,466		1		(6,625	)		—			—			(6,624	)
Issuance of common stock under employee stock purchase plan		501		1		3,314			—			—			3,315
Stock-based compensation		—		—		32,069			—			—			32,069
Reclassification of foreign currency translation adjustments into net loss upon liquidation of foreign subsidiaries		—		—		—			45			—			45
Unrealized gain on cash flow hedges		—		—		—			2,410			—			2,410
Net loss		—		—		—			—			(39,254	)		(39,254	)
Balances at September 30, 2025		46,295	$	46	$	1,303,319		$	(3,629	)	$	(878,698	)	$	421,038

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

XPERI INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)


Three Months Ended September 30, 2024	Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares			Amount			Capital			Loss			Deficit			Interest			Equity
Balances at July 1, 2024		45,746		$	46		$	1,241,931		$	(4,377	)	$	(848,867	)	$	(18,653	)	$	370,080
Change in ownership interest of the Company		—			—			(92	)		—			—			92			—
Vesting of restricted stock units, net of tax withholding		151			—			(716	)		—			—			—			(716	)
Repurchases and retirement of common stock		(1,121	)		(1	)		—			—			(9,998	)		—			(9,999	)
Stock-based compensation		—			—			15,249			—			—			—			15,249
Foreign currency translation adjustment		—			—			—			2			—			—			2
Unrealized loss on cash flow hedges		—			—			—			1,038			—			—			1,038
Net loss		—			—			—			—			(16,805	)		(3,026	)		(19,831	)
Balances at September 30, 2024		44,776		$	45		$	1,256,372		$	(3,337	)	$	(875,670	)	$	(21,587	)	$	355,823


Nine Months Ended September 30, 2024	Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Noncontrolling			Total
	Shares			Amount			Capital			Loss			Deficit			Interest			Equity
Balances at January 1, 2024		44,211		$	44		$	1,212,501		$	(2,865	)	$	(805,448	)	$	(17,097	)	$	387,135
Change in ownership interest of the Company		—			—			881			—			—			(881	)		—
Vesting of restricted stock units, net of tax withholding		1,108			1			(6,646	)		—			—			—			(6,645	)
Issuance of common stock under employee stock purchase plan		578			1			4,327			—			—			—			4,328
Repurchases and retirement of common stock		(1,121	)		(1	)		—			—			(9,998	)		—			(9,999	)
Stock-based compensation		—			—			45,309			—			—			—			45,309
Foreign currency translation adjustment		—			—			—			(323	)		—			—			(323	)
Unrealized loss on cash flow hedges		—			—			—			(149	)		—			—			(149	)
Net loss		—			—			—			—			(60,224	)		(3,609	)		(63,833	)
Balances at September 30, 2024		44,776		$	45		$	1,256,372		$	(3,337	)	$	(875,670	)	$	(21,587	)	$	355,823

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

XPERI INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Xperi Inc. (“Xperi” or the “Company”) is a leading consumer and entertainment technology company. The Company creates 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. Powering smart devices, connected cars, entertainment experiences and more, the Company brings together ecosystems designed to reach highly-engaged consumers, allowing it and its ecosystem partners to uncover significant new business opportunities, now and in the future. 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 revenue into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform.

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. All intercompany accounts and transactions have been eliminated in consolidation.

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, 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. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, which consist of normal recurring adjustments, necessary to state fairly the financial position of the Company and its results of operations and cash flows as of and for the periods presented. 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, 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 Company’s AutoSense in-cabin safety business and related imaging solutions (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. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. In addition, the Company has cash and cash equivalents held in international bank accounts that are denominated in various foreign currencies and has established risk management strategies designed to minimize the impact of certain currency exchange rate fluctuations.

The Company believes that any concentration of credit risk in its accounts receivable and unbilled contracts receivable are substantially mitigated by its evaluation processes and the high level of credit worthiness of its customers. 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.

For the three months ended September 30, 2025, there was one customer that accounted for 10% or more of total revenue, whereas there was none for the nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, one customer accounted for 10% or more of total revenue. As of September 30, 2025, no customer represented 10% or more of the Company’s net balance of accounts receivable. Additionally, two customers exceeded 10% of the Company’s combined net balance of current and noncurrent unbilled contracts receivable. As of December 31, 2024, no customer represented 10% or more of the Company’s net balance of accounts receivable, and one customer exceeded 10% of the Company’s net balance of current and noncurrent unbilled contracts receivable.

As part of the consideration for 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 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. The Company currently 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, 2025.

Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (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. The Company expects to adopt this updated guidance on a prospective basis in the disclosure within its December 31, 2025 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 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.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The update guidance aims to simplify how all entities currently estimate expected credit losses for their outstanding trade and other related receivables arising from revenue transactions and provides a practical expedient available for election by public entities. Once elected, all public entities are no longer required to consider forecasted information when estimating expected credit losses, but only the historical and current economic conditions relevant to the collectibility of the trade and other related receivables. The updated guidance will become effective on a prospective basis for the Company in the first quarter of 2026, with early adoption permitted. The Company does not expect the impact upon adoption to be material to its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This updated guidance eliminates the consideration of software project development stages and introduces additional considerations for the existing probability threshold assessment on completing a software development project. Entities are required to assess whether significant uncertainty exists in the development activities of the software before capitalizing any software costs, and such uncertainty is considered to exist if the project involves any technological innovations with novel and unproven features or unidentified significant performance requirements. The updated guidance will become effective for the Company in the first quarter of 2028 and may be adopted on either a prospective basis, full retrospective basis, or modified prospective basis with a cumulative-effect adjustment through retained earnings. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

NOTE 2 – REVENUE

Revenue Recognition

General

Revenue is recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services, which may include various combinations of goods and services which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of sales taxes collected from customers which are subsequently remitted to governmental authorities.

Some of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the individual performance obligations are separately accounted for if they are distinct. In an arrangement with multiple performance obligations, the transaction price is allocated among the separate performance obligations on a relative standalone selling price (“SSP”) basis. The determination of SSP considers market conditions, the size and scope of the contract, customer and geographic information, and other factors. When observable prices are not available, SSP for separate performance obligations is generally based on the cost-plus-margin approach, considering overall pricing objectives.

When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of technology or when a license of technology is the predominant item to which the variable consideration relates, revenue is recognized at the later of when the subsequent sale or usage occurs or the performance obligation to which some or all of the sales-based or usage-based royalty has been satisfied or partially satisfied.

Description of Revenue-Generating Activities

The Company derives the majority of its revenue from licensing its technologies and solutions to customers within the Pay-TV, Consumer Electronics, Connected Car and Media Platform product categories. Refer to Part I, Item 1 of the Form 10-K for detailed information regarding these product categories.

Pay-TV

Customers within the Pay-TV category are primarily multi-channel video service providers, consumer electronics (“CE”) manufacturers, and end consumers. Revenue in this category is primarily derived from licensing the Company’s Pay-TV solutions, including Electronic Program Guides, TiVo video-over-broadband (“IPTV”) Solutions, Personalized Content Discovery and enriched Metadata.

For these solutions, the Company generally provides on-going media or data delivery, either via on-premise licensed software, hosting or access to its platform. The Company generally receives fees on a per-subscriber, per-month basis or as a monthly

fee, and revenue is recognized during the month in which the solutions are provided to the customer. For most of the on-premise licensed software arrangements, substantially all functionality is obtained through the Company’s frequent updating of the technology, data and content. 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. In the case of certain minimum guarantee or 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.

Consumer Electronics

The Company licenses its audio technologies to CE manufacturers or their supply chain partners.

The Company generally recognizes royalty revenue from licenses based on units shipped or manufactured. Revenue is recognized in the period in which the customer’s sales or production are estimated to have occurred. This may result in an adjustment to revenue when actual sales or production are subsequently reported by the customer, generally in the month or quarter following sales or production. Estimating customers’ quarterly royalties prior to receiving the royalty reports requires the Company to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers, which could have a material impact on the amount of revenue it reports on a quarterly basis.

Certain customers enter into fixed fee or minimum guarantee agreements, whereby customers pay a fixed fee for the right to incorporate the Company’s technology in the customer’s products over the license term. In arrangements with a minimum guarantee, the fixed fee component corresponds to a minimum number of units or dollars that the customer must produce or pay, with additional per-unit fees for any units or dollars exceeding the minimum. The Company generally recognizes the full fixed fee as revenue at the beginning of the license term when the customer has the right to use the technology and begins to benefit from the license. If applicable, revenue is recognized net of the effect of any significant financing components calculated using customer-specific, risk-adjusted lending rates, with the related interest income being recognized over time on an effective rate basis. For minimum guarantee agreements where the customer exceeds the minimum, the Company recognizes revenue relating to any additional per-unit fees in the periods it estimates the customer will exceed the minimum and adjusts the revenue based on actual usage once that is reported by the customer.

Connected Car

The Company licenses its digital radio solutions, automotive infotainment and related offerings to automotive manufacturers or their supply chain partners.

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.

Media Platform

The Company generates revenue from advertising, TV viewership data, 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. 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 and Consumer Electronics product categories. Hardware product revenue is generally recognized when the promised product is delivered.

The Company also generates non-recurring engineering (“NRE”) revenue within all of its product categories. The Company recognizes NRE revenue as progress is made toward completion, generally using an input method based on the ratio of costs incurred to date to total estimated costs of the project.

Revenue from each of advertising, NRE services, and hardware products was less than 10% of total revenue for all periods presented.

The Company actively monitors and enforces its technology licenses, including seeking appropriate compensation from customers that have under-reported royalties owed under a license agreement and from third parties that utilize the Company’s technologies without a license. As a result of these activities, the Company may, from time to time, recognize revenue from periodic compliance audits of licensees for underreporting royalties incurred in prior periods, or from settlements of license disputes. 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.

Disaggregation of Revenue

The Company’s revenue that is recognized over time consists primarily of per unit royalties, per-subscriber per-month or monthly license fees, single performance obligations satisfied over time, and NRE services. Revenue that is recognized at a point in time consists primarily of fixed fee or minimum guarantee licensing contracts, advertising, settlements/recoveries and hardware products.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Recognized over time	$	82,818	$	91,025	$	242,855	$	274,880
Recognized at a point in time		28,814		41,866		88,743		96,446
Total revenue	$	111,632	$	132,891	$	331,598	$	371,326

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Pay-TV	$	49,781	$	81,676	$	149,582	$	199,234
Consumer Electronics		18,802		16,906		60,363		60,198
Connected Car		34,612		25,534		93,003		81,305
Media Platform		8,437		8,775		28,650		30,589
Total revenue	$	111,632	$	132,891	$	331,598	$	371,326

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


	Three Months Ended September 30,
	2025					2024
	Amount		Percentage of Revenue			Amount		Percentage of Revenue
U.S. and Canada (1)	$	48,067		43	%	$	59,229		45	%
Asia Pacific		40,631		36			51,957		39
Europe, Middle East and Africa		15,605		14			9,619		7
Other		7,329		7			12,086		9
Total revenue	$	111,632		100	%	$	132,891		100	%


	Nine Months Ended September 30,
	2025					2024
	Amount		Percentage of Revenue			Amount		Percentage of Revenue
U.S. and Canada (1)	$	158,167		48	%	$	184,456		50	%
Asia Pacific		119,235		36			121,748		33
Europe, Middle East and Africa		33,803		10			32,561		9
Other		20,393		6			32,561		8
Total revenue	$	331,598		100	%	$	371,326		100	%

(1) For the three months ended September 30, 2025 and 2024, the Company recognized $43.4 million and $54.7 million of revenue from the U.S., which represented 39% and 41% of total revenue for the respective periods. For the nine months ended September 30, 2025 and 2024, revenue from the U.S. was $144.6 million and $170.3 million, or 44% and 46% of total revenue, for the respective periods.

A significant portion of the Company’s revenue is derived from licensees headquartered outside of the U.S., principally in Asia Pacific and Europe, Middle East and Africa. Japan, which was part of Asia Pacific, contributed a significant amount of revenue, as shown in the following table (in thousands):


	Three Months Ended September 30,
	2025					2024
	Amount		Percentage of Revenue			Amount		Percentage of Revenue
Japan	$	28,812		26	%	$	37,705		28	%


	Nine Months Ended September 30,
	2025					2024
	Amount		Percentage of Revenue			Amount		Percentage of Revenue
Japan	$	59,374		18	%	$	63,615		17	%

No individual country in Europe, Middle East and Africa and other regions accounted for 10% or more of total revenue in all periods presented.

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2025			2024		2025		2024
Revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period	$	5,582		$	4,491	$	20,196	$	18,093
Performance obligations satisfied in previous periods (true ups, recoveries, and settlements) (1)	$	(364	)	$	701	$	1,243	$	4,063

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

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue that has not yet been recognized. As of September 30, 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:	Amounts
2025 (remaining 3 months)	$	15,715
2026		39,571
2027		21,047
2028		10,282
2029		4,433
Thereafter		1,513
Total	$	92,561

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, 2025 and 2024 (in thousands):


	Three Months Ended September 30,
	2025						2024
	Accounts Receivable			Unbilled Contracts Receivable			Accounts Receivable			Unbilled Contracts Receivable
Beginning balance	$	954		$	468		$	1,154		$	348
Provision for credit losses		15			(32	)		5			167
Recoveries/charge-off		(98	)		(3	)		(88	)		—
Ending balance	$	871		$	433		$	1,071		$	515

	Nine Months Ended September 30,
	2025						2024
	Accounts Receivable			Unbilled Contracts Receivable			Accounts Receivable			Unbilled Contracts Receivable
Beginning balance	$	946		$	499		$	1,906		$	190
Provision for credit losses		244			(54	)		(53	)		328
Recoveries/charge-off		(319	)		(12	)		(782	)		(3	)
Ending balance	$	871		$	433		$	1,071		$	515

NOTE 3 – COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

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


	September 30, 2025		December 31, 2024
Prepaid expenses	$	16,985	$	21,027
Prepaid income taxes		9,347		8,295
Finished goods inventory		—		1,061
Other		3,215		2,105
Total	$	29,547	$	32,488

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


	September 30, 2025			December 31, 2024
Computer equipment and software	$	58,367		$	54,737
Capitalized internal-use software		35,339			23,384
Office equipment and furniture		11,183			10,773
Building		17,876			17,876
Land		5,300			5,300
Leasehold improvements		10,894			10,778
Construction in progress		305			1,979
Total property and equipment		139,264			124,827
Less: accumulated depreciation and amortization(1)		(88,796	)		(80,354	)
Property and equipment, net	$	50,468		$	44,473

(1)

Includes $9.2 million and $4.1 million as of September 30, 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 and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Costs capitalized associated with internal-use software	$	4,580	$	3,139	$	12,105	$	9,721
Amortization of capitalized internal-use software	$	1,891	$	563	$	5,134	$	1,579

Accrued liabilities consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
Employee compensation and benefits	$	27,182	$	33,360
Accrued income taxes		13,270		6,259
Accrued expenses		13,061		16,108
Current portion of operating lease liabilities		9,536		15,353
Accrued other taxes		2,922		8,370
Third-party royalties		4,159		5,171
Other		8,067		9,799
Total	$	78,197	$	94,420

NOTE 4 – FINANCIAL INSTRUMENTS

Non-marketable Equity Securities

As of September 30, 2025 and December 31, 2024, other noncurrent assets included equity securities accounted for under the equity method with a carrying amount of $4.6 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 and nine months ended September 30, 2025 and 2024.

Derivatives Instruments

The Company uses a foreign exchange hedging strategy to hedge local currency expenses and reduce variability associated with anticipated cash flows. The Company’s derivative financial instruments consist of foreign currency forward contracts. The maturities of these instruments are generally less than twelve months. Fair values for derivative financial instruments are based on prices computed using third-party valuation models. All the significant inputs to the third-party valuation models are

observable in active markets. Inputs include current market-based parameters such as forward rates, yield curves and credit default swap pricing.

Cash Flow Hedges

The Company designates certain foreign currency forward contracts as hedging instruments pursuant to Accounting Standards Codification (“ASC”) No. 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 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):

Xperi Inc. 10-Q