Xperi looks to skip ahead to an IP spinoff and TVs running TiVo Stream OS

TiVo’s parent firm Xperi essentially suggested that investors hit the skip-forward button after announcing a loss of $14.6 million for the fourth quarter of 2021 on $214.4 million in revenue, down from the year-ago quarter’s $179.8 million profit on $433.9 million in revenue.

On the San Jose, Calif., company’s earnings call Wednesday, executives focused on plans for growth in Xperi’s product and intellectual-property businesses—including a plan to spin out the IP division under a new name.

“Our intent is to separate the IP and product businesses this fall,” CEO Jon Kirchner said on the call. The IP business will operate under the moniker Adeia, which he explained is Greek for “to license.”

In the most recent quarter, however, IP figured heavily in that year-over-year swing from profit to loss—as in, Xperi made too much from it in Q4 of 2020, right after it ended a years-long patent feud with Comcast.

The agreement Xperi inked with the cable giant in November of 2020, CFO Robert Andersen said on the call, came with a “large back-payment” upfront.

Overall, however, licensing (often enforced by litigation) has been very good to Xperi and TiVo. Kirchner said on the call that they’ve racked up $9 billion in IP revenue over the last two decades, adding “More than $1 billion of that revenue has been generated in just the last two years.”

Xperi now projects that IP revenue will grow from $350 million in 2021 to a baseline of $375 million in 2022.

On the product side, what Xperi calls the “pay TV” segment. built on the traditional TiVo DVR platform and related services, contributed most of the revenue, at $66.1 million for the quarter, down 6% year-over-year. Kirchner highlighted one new MVPD sign-up, the East Coast cable operator Breezeline.

Xperi’s consumer-electronics (led by its surround-sound technologies) and connected-car (for example, HD Radio) segments also saw declines but contributed less, at $24.5 million and $22.4 million.

But Xperi saw revenues increase, albeit from a smaller baseline, in the “media platform” business it’s building on its Tivo Stream platform—both the TiVo Stream 4K streaming dongle and the TiVo Stream OS behind it. Q4 revenue hit $11.7 million, up 15% year-over-year, here, and Kirchner forecast continued progress: “We expect double-digit growth in this category.”

That includes connected TVs built on TiVo Stream OS, which he said should ship in 2023 or 2024—and which he expects to constitute the bulk of TiVo’s business.

“The Stream 4K dongles, you know, they’re an element of the broader strategy,” Kirchner said on the call. “What we expect is that the embedded OS strategy will drive significantly more footprint.”