Xperi (XPER -15.25%), a media and automotive technology company best known for its TiVo streaming software and DTS-branded audio solutions, released its second quarter 2025 results on July 28, 2025. The most important news from the earnings release is that non-GAAP revenue and non-GAAP earnings per share came in below Wall Street expectations. Revenue for the period was $105.9 million, missing analyst estimates by $10 million (non-GAAP), while non-GAAP earnings per share were $0.11, two cents below the $0.13 non-GAAP consensus. Management also sharply reduced its outlook for the full year, forecasting a lower range for both revenue and margins. The quarter highlighted expanding user engagement in its media and automotive platforms, but also flagged challenges in monetizing this growth fast enough to offset a tougher market environment.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.11 | $0.13 | $0.12 | (8.3 %) |
| Revenue (Non-GAAP) | $105.9 million | $115.9 million | $119.6 million | (11.5 %) |
| Non-GAAP Operating Income | $8.8 million | $8.3 million | 6.0 % | |
| Non-GAAP Net Income | $4.8 million | $5.6 million | (14.3 %) | |
| Non-GAAP Adjusted EBITDA | $15.2 million | $14.6 million | 4.1 % | |
| Non-GAAP Adjusted EBITDA Margin | 14.4 % | 12.2 % | 2.2 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Xperi and Its Strategic Priorities
Xperi (XPER -15.25%) sits at the intersection of entertainment and technology, delivering software platforms for Smart TVs and connected cars. It owns well-known brands like TiVo (streaming and TV software), DTS (audio solutions), and HD Radio (digital radio broadcasting technology). Its business model centers on licensing intellectual property, delivering media operating systems to manufacturers, and delivering advertising solutions as video consumption shifts from legacy cable and satellite to digital streaming and in-car experiences.
In recent years, Xperi has focused on expanding its independent media platform for Smart TVs and rolling out DTS AutoStage, an infotainment platform for vehicles. Key success factors are growing the number of active users on its platforms, increasing device penetration, and improving monetization via advertising and subscription revenues. The company also seeks to maintain regulatory compliance as privacy and data protection rules evolve in the U.S. and Europe.
Quarter in Detail: Growth in Platform Users and a Revenue Miss
During the quarter, the company's strongest achievements came from user and device growth. TiVo One, a streaming media platform for Smart TVs, grew from 2.5 million to 3.7 million monthly active users over the quarter, keeping Xperi on track to surpass its goal of 5 million TiVo One monthly active users by the end of FY2025. The company continued deployment of TiVo OS with new TV brands, broadening its reach in the U.S. and Europe. For example, Sharp (U.S.) and Skyworth/METZ (Europe) shipped new Smart TVs powered by TiVo's independent operating system, and over 80 new entertainment content partner apps were added to the platform, indicating increasing appeal and usage.
In the automotive space, DTS AutoStage, which delivers digital infotainment experiences in vehicles, expanded its base to 12 million vehicles as of Q2 FY2025, up from 11 million in the previous quarter. New launches with major automotive brands, such as BMW, Ford, Hyundai, and Tesla, contributed to this growth. HD Radio licensing deals also provided steady recurring revenue, reflecting Xperi's strategy to maintain relevance as car buyers expect more advanced built-in media features. Overall, the company highlighted healthy adoption trends and continued expansion despite the market slowdown referenced by management.
The period saw a substantial shortfall in non-GAAP revenue and earnings versus market expectations, with a double-digit decline from the same period in the prior year. The company stated that the changing macroeconomic environment created increased uncertainty for its customers, ultimately impacting financial results. Cash generation improved, with $10 million in operating cash flow and $5 million in free cash flow. However, the divestiture of the Perceive business in October 2024 also factored into the lower year-over-year revenue, as the prior period included a $1.9 million contribution from that segment.
On the cost side, the company managed to modestly boost its non-GAAP operating income and adjusted EBITDA figures despite the revenue decline, signaling some progress on expense control. Adjusted EBITDA margin improved to 14.4%, up from 12.2% in the prior year. Non-GAAP net income and earnings per share declined slightly. This improvement was largely due to business optimization efforts and divestitures, as reflected in non-GAAP adjusted EBITDA.
Business Model Shifts, Monetization, and Platform Evolution
Xperi's strategy centers on developing technology platforms for partners who lack the resources to build their own solutions. For Smart TV manufacturers, its independent TiVo OS lets them brand the viewing experience and access recurring revenue streams from content and advertising. The company stresses the importance of being an agnostic provider, allowing brands to deliver a tailored customer experience and maintain monetization opportunities as more viewers move away from traditional linear TV channels to streaming platforms.
Advertising monetization remains a critical area for Xperi. The TiVo One Advertising Platform, which is deployed across connected Smart TVs and internet protocol TV (IPTV) set-top boxes, leverages user growth to attract more advertising revenue. Management stated it is "On Track to Exceed FY2025 Growth Goals for Active Users and Devices," which is essential for reaching a meaningful scale in advertising. However, despite the platform's expanding reach, Xperi provided little new detail on actual advertising revenue, average revenue per user (ARPU), or engagement rates in this quarter's release. The company is running pilot programs for new homepage ad units, with early signs of advertiser interest, but the financial impact remains to be fully realized.
In the connected car segment, Xperi's DTS AutoStage platform continues growing as more vehicles launch with this in-car entertainment system. This product integrates streaming, internet radio, and metadata for a modern infotainment experience, and benefits from multi-year licensing contracts with major automotive manufacturers. Beyond licensing, minimum guarantee contracts across recurring products like HD Radio help provide revenue consistency. The company's exposure to global regulatory trends in data privacy also shapes its platform, requiring compliance with laws like the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR) in Europe. No new developments were disclosed in data privacy this quarter.
Segment details were limited in the preliminary release, but continued user and device expansion signals the company remains focused on its platform-first strategy. IPTV subscriber households grew to 3.0 million, up from over 2.75 million at the end of the previous quarter. This ongoing growth, alongside new operator partnerships, supports Xperi's plan to expand its addressable market and demonstrate resilience amid shifts in video consumption habits.
Outlook: Lowered Guidance and Investor Focus Ahead
Management revised its guidance for FY2025, cutting the expected revenue range (both GAAP and non-GAAP) to $440–460 million from the previous $480–500 million. Non-GAAP adjusted EBITDA margin guidance was also lowered, now expected between 15% and 17%, compared to the prior 16% to 18% range. Leadership cited "the changing macroeconomic environment" for reduced visibility and the increased uncertainty facing its customers. The guidance cut marks a significant setback following stable expectations earlier in the year.
Looking ahead, investors should watch for continued growth in TiVo One active users and AutoStage vehicle rollouts. Regulatory changes in privacy and data protection also remain a background risk as the company expands into new markets and platforms.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
