Xperi Corporation (NASDAQ:XPER) Q3 2018 Earnings Conference Call Transcript

Nov 07, 2018 • 05:00 pm ET

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Xperi Corporation (NASDAQ:XPER) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Xperi Third Quarter Fiscal Year 2018 Earnings Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation the call will be open for questions.

It is now my pleasure to turn the conference over to Geri Weinfeld, VP of IR for Xperi. Ma'am, please go ahead.

Executive
Geri Weinfeld

Good afternoon, everyone. Thanks for joining us, as we report our third quarter fiscal year 2018 financial results. With me on the call today are Jon Kirchner, CEO; and Robert Andersen, CFO.

(Forward-Looking Cautionary Statements)

Second, we refer to certain non-GAAP financial measures, which exclude restructuring and other exit costs, acquisition and related expenses, acquired intangible asset amortization, charges for acquired in process research and development and stock-based compensation expense. We've provided reconciliations of these non-GAAP measures to the most directly comparable GAAP measures in the earnings release and on the IR section of our website.

The recording of this conference call will be available on our IR website at www.xperi.com.

I'll now turn the call over to Jon Kirchner.

Executive
Jon Kirchner

Thanks, Geri, and thanks, everyone, for joining us. Let me begin today's call with a few financial highlights. Billings in Q3 were $100.6 million, an 18% increase versus last year and in line with our outlook for the quarter. Notably expenses for the quarter were lower than expected placing us above our profitability outlook. We generated nearly $30 million in operating cash flow which was slightly impacted by certain balance sheet movements and approximately $6 million in billings that occurred late in the quarter most of which has been collected in Q4.

For today's call I will provide an update on each of our markets and the progress we made toward the 2022 targets we provided in February. Robert will then provide a more in-depth discussion of our Q3 financials and our outlook for the fourth quarter.

Let's start with the product licensing business. Total product licensing billings during the quarter excluding auto recoveries were $53.2 million, up 15% year-over-year. Growth in the quarter occurred across all three market categories and year-to-date product licensing is up approximately 4%. For the year, we expect product licensing growth to tick upward as we enter a seasonally strong period. Importantly, based on continued investments in each of our markets we expect our five-year growth rate to accelerate into the double digits as we move into 2020 and beyond.

Much of our strategic investment continues to focus on building ecosystems that are both stable and attractive over the long term. In September, we announced an exciting new partnership with IMAX which for the first time allows consumers to enjoy the IMAX enhanced entertainment experience at home supported by a full range of consumer electronics products. Importantly, this initiative promotes the continued penetration of our audio technologies and expands the unique content support for our licensed (ph) technologies and brands. The IMAX enhanced program exclusively licensed by DTS, offers consumers a