XPER 10-K & 10-Q changes, risk factors and insider trading

The markets for our products, services and technologies are characterized by an increasingly competitive landscape, rapid change and technological evolution and obsolescence, new and improved product introduction, changing consumer demand, and evolving industry standards. We will need to continue to expend considerable resources on research and development in the future in order to continue to design, deliver and enhance innovative media, entertainment, and audio products, services and technologies. The development of enhanced and new technologies, products, and services is a complex, costly and uncertain process requiring high levels of innovation, highly skilled engineering and development personnel, and the accurate anticipation of technological and market trends. For example, smart TVs powered by TiVo OS, our newnewer embedded operating system, and cars featuring DTS AutoStage videoVideo serviceService Powered by TiVo, our newnewer in-car video service, arewas now availableintroduced to consumers.consumers in recent years. If consumers do not adopt and use our products or they do not find our products or their features to be compelling, our future growth and profitability may be negatively impacted. Despite our efforts, we:

We expect that our technologies will continue to compete with technologies of internal design groups at competing companies or our customers. Internal design groups at competing companies or our customers create their own audio, entertainment, and media solutions. If these internal design groups introduce unique solutions that are comparable or superior to our technology, they may not license our technology. These groups may design technology that is less expensive to implement or that enables products with higher performance or additional features. Many of these groups have substantially greater resources, greater financial strength and lower cost structures which may allow them to undercut our price. They also have the advantage of access to internal corporate strategies, technology road-mapsroadmaps and technical information. As a result, they may be able to bring alternative solutions to market more easily and quickly. We face competitive risks across all our businesses, including:

Some of our current or future competitors may have significantly greater financial, technical, marketing and other resources than we do,have, may enjoy greater brand recognition than we do, or may have more experience or advantages than we have in the markets in which they compete. Further, many of the consumer hardware and software products that include our technologies also include technologies developed by our competitors. In order for us to remain competitive, we must price our products and services competitively, and continue to invest significant resources in innovation and product development to enhance our technologies and our existing products and services and introduce new high-quality technologies, products and services to meet the wide variety of market and competitive pressures. We may not be able to invest in innovation and product development at the same level as our competitors. Our ability to generate revenue from our business will suffer if we fail to do so successfully.

Our Media Platform’s monetization strategy depends on our ability to generate revenue from advertisers, primarily from the sale of digital advertising and related services, media and entertainment promotional spending, and viewing of free ad-supported programming. Our success will depend on our ability to increase the number of active users, the corresponding number of content hours that are viewed by them, and the amount of free ad-supported content viewed by them.them, as well as to license viewership data. As the user base grows and we increase the amount of content offered and viewed by users, we will need to effectively monetize the user base based on their viewing activity. Our ability to deliver more relevant advertisements to users and to increase the value of our services to advertisersadvertisers, advertising agencies, and others depends in part on the collection or use of user engagement data, which may beis restricted or prevented due toby a number of factors, including users having the ability to opt out from the collection and use of our data or data collected by our service providers or our advertising partners, restrictions imposed by advertisers, content providers, advertising partners, or service providers,providers; changes in technology, and developments in laws, regulations, and industry standards. Competition for digital advertising and media, entertainment promotional spending and data licensing is intense, and our competitors have larger user bases and more experience in this industry. If users spend most of their time within content where we have limited or no ability to place advertisements or leverage user information, users opt out from our ability to collect data for use in providing more relevant advertisements, or we are otherwise not able to collect or use suchviewership information, users spend less time viewing free ad-supported programming, or advertisers or agencies choose to purchase advertising on other platforms instead of ours, we may not be able to achieve the expected growth in monetization revenue or profitability. There can be no assurance that we will be successful in executing our monetization strategy, or in accurately forecasting potential revenue from our Media Platform solutions.

Our Media Platform business may not be successful in developing, maintaining, and expanding key relationships with manufacturers of TV OEMsand andother streaming devices, Pay-TV Operators as well as content publishers.

Our monetization strategy depends on our ability to develop, maintain and expand our relationships with key TV and streaming device manufacturing partnerspartners, Pay-TV operators and content publishers. The initial focus of TiVoour OSmonetization strategy was to launch TiVo OS in Smart TVs in the EU market, which is a relatively new market for our Media Platform business. However,Our strategy now includes TVs supported by our Pay-TV business in the United States. The overall success of our monetization strategy will depend in part on our ability to expand TiVo OS into additional Smart TVs for the United States and other international markets.markets Inand Februarymaintain 2025,and wegrow announcedour thatPay-TV Smart TVs powered by TiVo OS are now availablefootprint in the U.S.United market. We further announced that there are over two million activated Smart TVs powered by TiVo OS in Europe.States. However, there can be no assurance that we will be successful in further penetrating the European or U.S. markets with either increased volume of Smart TVs, TVs supported by our Pay-TV business or additional partner relationships, or that we will be able to maintain such partner relationships.

We need to identify, establish and maintain relationships with content publishers to provide users with popular streaming services, channels and content. Furthermore, we need to develop new relationships with local content partners or enter into new arrangements with existing content publishers as we enter into new international markets or expand our services and features. Some TV manufacturers will not deploy TiVo OS unless specific content publishers are on the platform, andwhile theresome content publishers will not enter into an arrangement with us until TiVo OS has a minimum number of Smart TVs on the platform. There can be no assurance that we will be able to secure or maintain relationships with the key content publishers.

We do not typically receive license revenue from our TiVo OS arrangements with TV manufacturers, and we expect to incur significant expenses in connection with these commercial agreements. In addition, Pay-TV’s broadband-only offerings generate lower licensing fees compared to our other Pay-TV offerings. The primary economic benefits that we expect to derive from these license arrangements will beare indirect, primarily from growing the number of active users to generate advertising-related revenue. If these arrangements do not result in an increase in active users, or if that growth does not result in an increase in advertising-related revenue, our business may be harmed. If we are not successful in maintaining existing and creating new relationships with TV manufacturing partners,partners and Pay-TV operators, or if we encounter technological, content licensing, or other impediments to these relationships, our ability to grow our business could be adversely impacted. InThe addition,cost ifof memory chips has recently increased as a result of the increased demand from artificial intelligence infrastructure growth, and such cost change has resulted in some consumer electronics manufacturers reducing their inventory forecast or forecasting lower sales. If our TV manufacturing partners reduce their forecasts or delay the market launch dates for distributing Smart TVs or other streaming devices with TiVo OS, or if they choose to deploy with a competitor’s operating system or develop their own operating system, our business may be harmed.

Our business depends, in part, on royalty-basedroyalty- and advertising-based revenue models, which are inherently risky.

Our business is dependent, in part, on future royalties and/or advertising revenue paid to us by customers and partners. Royalty payments under our licenses may be based upon, among other things, the number of subscribers for Pay-TV, a percent of net sales, a per-unit sold basis or a fixed monthly, quarterly or annual amount. Advertising-related revenue may be based upon, among other things, the number of users who watch a particular service, availability of inventory, advertiser interestinterest, and opportunities to personalize advertisements. We are dependent upon our ability to structure, negotiate and enforce agreements for the determination and payment of royalties and advertising-based revenue, as well as upon our customers’ and partners’ compliance with their agreements. We have been impacted by and may continue to face risks inherent in royalty-basedroyalty- and/or advertising-based business models, many of which are outside of our control, such as the following:

the number of subscribers our Pay-TV customers have or the number of set topset-top boxes (“STBs”) our Pay-TV customers provide to their end-user subscribers;

the willingness and ability of advertisers or data partners to usepurchase our advertising placements or viewership data that are available via our licensed technology;

the demand for products that incorporate our licensed technology and the royalty rates that customers are willing to pay for such products;

the impact of recent macroeconomic conditions or future economic downturns, or labor disruptions such as strikes, and overall consumer sentiment; and the impact of poor financial performance of our customers.

For example, the ability to enjoy digital entertainment content downloaded or streamed over the internet has caused some consumers to elect to cancel their Pay-TV subscriptions. Some of our Pay-TV customers have experienced declines in their subscriber bases, which has resulted in a decline in the royalties they owe us. In addition, large streaming platforms such as Netflix, Disney+ and Amazon Prime Video offer ad-supported tiers of their streaming services, which has further increased competition for streaming advertising revenue. Also, the strikes called by the Writers Guild of America and SAG-AFTRA reduced the demand for advertising and media and entertainment promotional spending campaigns, which negatively impacted our business and results of operations. Although the strikes have been resolved, there continued to be reduced demand for media and entertainment promotional spending campaigns for a period of time, which adversely affected our business, financial condition, results of operations and cash flows.

Our licensees have and may in the future delay, refuse to or be unable to make payments to us due to financial difficulties or otherwise, or shift their licensed products to other companies to lower their royalties to us.

A number of our customers may face severe financial difficulties from time to time, which has resulted and may in the future result in their inability to make payments to us in a timely manner, or at all. In addition, we have had a history of, and we may in the future experience, customers that delay or refuse to make payments owed to us under license or settlement agreements. Our customers may also merge with or may shift the manufacture of licensed products to companies that are not currently licensees of our technology. This could make the collection process complex, difficult, and costly, or could result in negotiations for pricing reductions, all of which may adversely impact our business, financial condition, results of operations and cash flows.

The terms of our license agreements often require our customers to document their use of our technology and report related data to us on a quarterly basis. Although our license terms generally give us the right to audit books and records of our customers to verify this information, audits can be expensive, time consuming, and may not be cost justifiedcost-justified based on our understanding of our customers’ businesses, especially given the international nature of our customers. Our license compliance program audits certain customers to review the accuracy of the information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty to which we are entitled under the terms of our license agreements, but we cannot ensure that such audits will be effective to that end.

TV OEMs and ODMs,original design manufacturers (“ODMs”), CE, digital set-top hardware manufacturers, and PC manufacturers; TV main board manufacturers, and chip manufacturers;

advertisers andadvertisers, advertising technology partners and data partners;

We have made several acquisitions, domestically and internationally, and recently divested our AutoSense and related imaging business as well as substantially all of the assets and certain liabilities of Perceive Corporation (later known as Xperi Pylon Corporation and subsequently dissolved in December 2024), our subsidiary focused on edge inference hardware and software technologies. Our currentstrategy planhas is to continuebeen to acquire or divest assets, technologies, or companies where we believe the transaction would be strategic to our future business or strategies or otherwise would be in the best interest of the Company and our stockholders. Acquisitions and divestitures involve challenges in terms of successful integration or separation, as applicable, of technologies, products, services, and employees. We may not realize the anticipated benefits of acquisitions or divestitures we have completed or may complete in the future, and we may not be able to successfully incorporate or separate the applicable services, products, or technologies, or integrate or separate personnel from the applicable businesses, in which case, our business, financial condition and results of operations could be harmed.

Demand for and adoption of our Connected Car technologies, including HD Radio and DTS AutoStage, may not be sufficient for us to continue to increase the number of customers for these technologies, which include ICintegrated circuit manufacturers, manufacturers of broadcast transmission equipment, consumer electronics product manufacturers, component manufacturers, data service providers, manufacturers of specialized and test equipment and radio broadcasters, automobile manufacturers and Tier 1 suppliers to automobile manufacturers.

Demand for our automotive technologies also may be impacted by declines in the automotive industry, which historically has been cyclical and experienced downturns during declining economic conditions. TheFor example, there was a persistent downturn in the automotive markets resulting from the COVID-19 pandemic and related events reduced demand for these technologies. ThereThe iscurrent nomacroeconomic guaranteeuncertainties thatcould growthresult trendsin willanother returndownturn toin ourthe pre-pandemicautomotive level,markets, and a sustained reduction in our automotive-based royalties may cause us to fail to meet our previously projected growth rates. Furthermore, demand for and adoption of our HD Radio and DTS AutoStage technologies and services may not continue to increase and may face increased competition from existing suppliers or new entrants providing the same or similar services, in some cases, at lower prices or free of charge.

the continued participation and support by broadcasters and content owners of the DTS AutoStage technology and services; and the marketing and pricing strategies that we employ and that are employed by our customers and retailers.retailers, and the success of advertising-based business models we may adopt.

In connection with our deployment arrangements for TiVo Pay-TV products, we engage in complex licensing, development and engineering services arrangements with our marketing partners and distributors. These deployment agreements with television service providers usually provide for some or all of the following deliverables: software engineering services, solution integration services, hosting the TiVo service, maintenance and support. In general, these contracts are long-term and complex and often rely on the timely performance of such television service provider’s third-party vendors that are outside of our control. The engineering services and technology we agree to provide and/or develop may be essential to the functionality of the licensed software and delivered product or such software may involve significant customization and modification for each customer. We have experienced in the past, and may in the future experience, delays in delivery with television service providers as well as significant increases in expected costs of development and performance in certain instances. Additional delays could lead to additional costs and adverse accounting treatments, potentially resulting in us recognizing costs earlier than expected. If we are unable to deliver the contracted-for technology, including specified customizations andcustomizations, modifications and services in a timely manner or at all, then we could face penalties in the form of unreimbursed engineering development work, loss of subscriber or minimum financial commitments on the part of our partners, or in extreme cases, the early termination of such distribution agreements. In any such case, our business, financial condition, and results of operation may be harmed.

TechnologiesTechnologies, such as those we are developingdeveloping, are subject to supply chain disruptions, cost pressures, extensive competition, and a relentless pace of innovation. These products could be copied or functionally surpassed by other designers, manufacturers, or innovators, some of whom may have far greater financial resources than us, and who may be able to develop products with greater capabilities and/or at a lower cost. Potential customers may also be hesitant to adopt new technologies and may instead turn to competitors who offer competing products in different deployment models. Our technologies may also require potential customers to adapt their existing software to fully realize the technological advantages. Delays or reluctance by customers to adapt their software could affect the success of these technologies in the marketplace, which may adversely impact our business, financial condition, and results of operations.

With respect to our products or services that incorporate AI Technologies, the market for such products and services is rapidly evolving and important assumptions about the cost, performance, and perceived value associated with our services or products may be inaccurate. We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate. In addition, market acceptance and consumer perceptions of products and services that incorporate AI Technologies isare uncertain. Our failure to successfully develop and commercialize our products or services involving AI Technologies could depress the market price of our stock and impair our ability to: raise capital; expand our business; provide, improve and diversify our product offerings; continue our operations and efficiently manage our operating expenses; and respond effectively to competitive developments.

In addition to our proprietary AI Technologies, we use AI Technologies licensed from third parties in our internal operations, and our ability to continue to use such technologies at the scale we need may be dependent on access to specific third-party software and infrastructure. We cannot control the availability or pricing of such third-party AI Technologies, especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers. In addition, to the extent any third party AI Technologies are used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider. Additionally, AI Technologies incorporated into our products and services may use algorithms, datasets or training methodologies that may be flawed or contain deficiencies that may be difficult to detect which, in turn, may create results that are factually inaccurate, biased or otherwise flawed. If our customers or others rely on or use such results to their detriment, it may expose us to reputational harm, competitive harm or legal liability. Additionally, the use of certain AI Technologies, including generative AI, may place our and our customers’ confidential information at risk if adequate security measures are not employed.

These defects or errors could also result in product liability, service level agreement claims or warranty claims. Although we attempt to reduce the risk of losses resulting from these claims through warranty disclaimers and limitation of liability clauses in our agreements, these contractual provisions may not be enforceable in every instance. Any such defects, errors, or unintended performance problems in existing or new products or services, and any inability to meet customer expectations in a timely manner, could result in loss of revenue or market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, increased insurance costscosts, and increased service costs, any of which could materially harm our business, financial condition and results of operations.

Technological changes may also impede the ability to distribute metadata. Our inability to renew existing arrangements on terms that are favorable to us, or enter into alternative arrangements that allow us to effectively provide and transmit our metadata to customers, could have a material adverse effect on our businesses that leverage metadata, including our interactive program guide business, and could damage the attractiveness of our metadata offerings to our customers or could increase the costs associated with providing our metadata offerings, and cause our revenue or margins to decline, which would adversely impact our business, financial condition and results of operations.

Our TiVo software and services operate on a number of hardware products,products that are produced by third-party hardware companies, including DVR and non-DVR set-top-boxes and TVs and other streaming devices with TiVo OS that are produced by third-party hardware companies.OS. If one or more of these third parties is unable or unwilling to produce or distribute such hardware products, our business could be harmed. Further, if we fail to effectively manage the integration of our software and services with our hardware partners’ devices, we or our manufacturing partners could suffer from product recalls, poorly performing products and higher than anticipated warranty costs.

For TiVo OS, we are relying on third-party hardware companies to assist in the development, distribution and launch of a relatively new market entry product. If one or more of these third parties is unable or unwilling to meet its obligations regarding such entry, the success of TiVo OS could be harmed.

Additionally, certain features and functionalities of our TiVo OS, TiVo service, and DVRs and non-DVR set-top-boxesset-top-boxes, and other streaming devices that incorporate our software depend on third-party components and technologies. If we or our third-party partners are unable to purchase or license such third-party components or technologies, we may not be able to offer certain related features and functionalities to our customers. In such a case, the desirability of our products to our customers could be reduced, thus harming our business, financial condition, and results of operations.

Any one or more of the above factors may adversely affect our international operations and could significantly affect our business, financial condition, results of operations and cash flows. For example, the United States has signaledindicated a shift in its intention to change U.S. trade policy, including renegotiating or terminating existing trade agreements and leveraging tariffs. InBeginning Februaryin April 2025, the United States imposed additional tariffs on imports from ChinaChina, announced both reciprocal and announced and subsequently paused implementation ofsector-specific tariffs on imports from Canadaother countries, and Mexico.may implement new reciprocal tariff rates in the future. These additional tariffs or any future tariffs, as well as a government’s adoption of “buy national” policies or retaliation by another government against such tariffs or policies have introduced significant uncertainty into the marketmarket, may strain global supply chains that we depend on, and may adversely affect the prices of and demand for the products that include our technologies, which could have a negative impact on the Company’s results of operations. Furthermore, a decrease in discretionary consumer and corporate spending, including as a result of price increases stemming from the imposition of tariffs on foreign imports, could result in a reduction in the purchases of TVs, automobiles and consumer electronic devices, and could cause an ensuing reduction in our royalty-based and monetization revenue.

We have in the past and may in the future require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including to develop new products or services, further improve existing products and services, or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional capital. However, additional capital may not be available when we need it, on terms that are acceptable to us, or at all. In addition, any debt financing that we secure in the future could involve restrictive covenants which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

If we or our third-party providers experience significant disruptions of our IT Systems or data security incidents, this could result in harm to our reputation, subject us to liability, cause us to modify our business practices, and otherwise materially adversely affect our business, results of operations, and financial conditions.condition.

We are dependent on information technology systems and infrastructure for both internal and external operations that are critical to our business (collectively, “IT Systems”). We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems.Systems that we do not control and have no technical ability to protect. In the ordinary course of our business, we and certain of our third-party providers collect, store, process, and transmit large amounts of corporate, personal, and other information, including intellectual property, proprietary business information, user information (including user payment card information), employee information, and other confidential information (collectively, “Confidential Information”). Our obligations under applicable laws, regulations, contracts, industry standards, self-certifications, and other documentation mayrequirements include maintaining the confidentiality, integrity, and availability of our IT Systems and Confidential Information, including maintaining reasonable and appropriate security safeguards as part of an information security program.Information. Failure or perceived failure to protect our IT Systems and Confidential Information couldexposes createus potentialto legal liability to regulators, our business partners, our users, and other relevant stakeholders, and harm to our reputation by impacting the attractiveness of our services to existing and potential users.

Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence—that circumvent security controls, evade detection and remove forensic evidence. As a result, weit mayis beincreasingly unabledifficult to detect, investigate, remediate or recover from future attacks orand incidents, orand to avoid a material adverse impact to our IT Systems, Confidential Information or business. We also deploy tools in our IT Systems that allow for the identification and tracking of known security vulnerabilities, but we cannot guarantee that patches or mitigating measures will be implemented before such vulnerabilities can be exploited by a threat actor. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information.

We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adversesignificant impact to the availability, integrity or confidentiality of our IT Systems or Confidential Information could damage our business, hurt our ability to distribute products and services and collect revenue, threaten the proprietary or confidential nature of our technology, harm our reputation, increase the costs of our ongoing cybersecurity protections, result in costly enhancements or remediation measures, and expose us to litigation (including class action lawsuits), government investigations, and enforcement actions, and other liabilities. Because some of our technologies are intended to inhibit use of or restrict access to our customers’ intellectual property, we may become the target of hackers or other persons whose use of or access to our customers’ intellectual property is affected by our technologies.

The European Union (“EU”) also imposes cybersecurity obligations on a wide range of products with digital elements and on organizations that provide managed information and communications technology services, including with respect to software development for other businessesbusinesses. and theThe United Kingdom (“UK”) has implemented legislation that, among other things, imposes obligations on manufacturers, importers and distributors of specific categories of consumer connectable products to comply with minimum security requirements with a view to securing such products against cyber-attacks. EU Member States may also impose more stringent requirements on in-scope entities with respect to cybersecurity than those imposed by the EU. This could lead to divergences in approach and make compliance more challenging and costly for multinational organizations. Noncompliance with any applicable EU or UK laws, regulations or other requirements could expose us to significant fines.fines, market access restrictions, product or service withdrawals or recalls, and delays to planned changes.

We collect, use, process, transmit, and store information that is related to individuals and/or that constitutes “personal data,” “personal information,” “personally identifiable information,” or similar terms under applicable data privacy laws (collectively, “Personal Information”) about consumers and their devices, employees, job applicants and partners. We also rely on third-party service providers and partners to collect, process, transmit, and store Personal Information on our behalf. We collect such information from individuals located both in the United States and abroad, and we,we and our service providers and business partners use tracking technologies, including cookies, device identifiers, and related technologies, to help us manage and track our users’ interactions with our products and services, devices, website, and partners’ content.

To deliver relevant advertisements effectively, we must successfully leverage this Personal Information, as well as data provided by third parties. Our ability to collect and use such data could be restricted by a number of factors, including users having the ability to refuse consent to or opt out from our, our service providers’, or our advertising partners’ collection and use of this Personal Information, restrictions imposed by advertisers, content partners, licensors, and service providers, changes in technology, and developments in laws, regulations, and industry standards. For example, certain EU and UK laws and regulations prohibit access to or storage of information on a user’s device (such as cookies and similar technologies that we use for advertising) that is not “strictly necessary” to provide a user-requested service or used for the “sole purpose” of a transmission unless the user has provided consent, and users may choose not to provide this consent to collection of information which is used for advertising purposes.

For example, privacy and consumer rights groups and government bodies (including the U.S. Federal Trade Commission (“FTC”), state attorneys general, the European Commission, and European and UK data protection authorities), have increasingly scrutinized privacy issues with respect to devices that identify or are identifiable to a person (or household or device) and Personal Information collected through the internet, and we expect such scrutiny to continue to increase. The U.S. federal government, U.S. states, and foreign governments have enacted (or are considering) laws and regulations that could significantly restrict industry participants’ ability to collect, use, and share Personal Information, such as by regulating the level of consumer notice and consent required before a company can place cookies or other tracking technologies or collect categories of Personal Information deemed sensitive. Additionally, many such laws and regulations provide consumers with the ability to opt-out of the use of their Personal Information for certain processing purposes, which could impact our business. For example, the EU General Data Protection Regulation (“GDPR”) imposes detailed requirements related to the collection, storage, and use of Personal Information related to peopleindividuals locatedwho reside in the EU (or which is processed in the context of EU operations) and places data protection obligations and restrictions on organizations, and may require us to make further changes to our policies and procedures in the future beyond what we have already done. EU Member statesStates also have some flexibility to supplement the EU GDPR with their own laws and regulations and may apply stricter requirements for certain data processing activities. AsIn the UK, the UK General Data Protection Regulation and the UK Data Protection Act 2018 (together, “UK GDPR”) impose similar requirements as the EU GDPR. However, as a result of the exit of the United KingdomUK from the European Union,EU, the UK’s GDPRdata willprotection notframework automaticallyhas incorporatestarted anyto futurediverge changesfrom that in the EU, including as a result of amendments made to the EU’sUK GDPR goingunder forwardthe UK Data (whichUse wouldand needAccess) Act 2025. Compliance costs may increase in order to becomply specificallywith incorporatedlegal byregimes in both the United Kingdom government). Moreover, the United Kingdom government has publicly announced plans to reform the UK’s GDPR in ways that, if formalized, are likely to deviate from the EU’s GDPR in certain areas, which creates a risk of divergent parallel regimes and related uncertainty, along with the potential for increased compliance costs and risks for affected businesses. We are monitoring such developmentsEU and the impactUK, thisand maycreate havelegal onuncertainty ouras business.the data protection laws of the EU and UK continue to diverge.

If we are not compliant with data protection laws or regulations if and when implemented, we may be subject to significant fines and penalties (such as restrictions on Personal Information processing) and our business may be harmed. For example, under the EU GDPR and UK GDPR, fines of up to 20 million euroseuros, or 17.5 million pounds, or 4% of the annual global revenue of a noncompliant company, whichever is higher, as well as data processing, possible prohibitions, or other restrictions, could be imposed for violation of certain of the GDPR’srelevant requirements. Further,As we are subject to both the EU GDPR and the UK GDPR, we could be fined under both legal regimes for the same breach. Further, each regime provides for private litigation related to the processing of personal data that can be brought by classes of data subjects or consumer protection organizations authorized at law to represent the data subjects’ interests.

The U.S. data protection legal landscape also continues to evolve, with various states having enacted broad-based data privacy and protection legislation and with states and the federal government continuing to consider additional data privacy and protection legislation. The potential effects of this legislation are far-reaching and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to comply. For example, the California Consumer Privacy Act provides for civil penalties for violations, as well as a private right of action for certain data breaches that may increase regulatory investigations and data breach litigation.litigation, and has prompted a wave of similar legislative developments in other states. Federal laws such as the Children’s Online Privacy Protection Act and Video Privacy Protection Act (“VPPA”) may also pose risks to our business.business, as plaintiffs are increasingly filing lawsuits against businesses alleging that the use of certain tracking technologies violates the VPPA, state and federal wiretapping laws, and/or other laws.

In addition, each U.S. state and most U.S. territories, each EU member state, and the United Kingdom,UK, as well as many other foreign nations, have passed laws requiring notification to regulatory authorities, affected users, or others within a specific timeframe when there has been a security breach involving, or other unauthorized access to or acquisition or disclosure of, certain Personal Information and impose additional obligations on companies. Additionally, our agreements with certain users or partners may require us to notify them in the event of a security breach. Such statutory and contractual disclosures are costly, could lead to negative publicity, may cause our users to lose confidence in the effectiveness of our security measures, and may require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach. Compliance with these obligations could delay or impede the development of new products and may cause reputational harm.

As part of our data protection compliance program, we have implemented data transfer mechanisms to provide for the transfer of Personal Information from the EEA or the United KingdomUK to the United States.

We continue to assess the available regulatory guidance, determinations, and enforcement actions from EU and UK Data Protection Authorities and the U.S. Department of Commerce on international data transfer compliance for companies, including guidance on specific supplementary measures in addition to the model clauses as well as specific data sharing that may be deemed a cross-border transfer for which appropriate safeguards must be implemented. AlthoughAs thea United Kingdom currently has an adequacy decision from the European Commission, such that standard contractual clauses are not required for the transferresult of personallegal datauncertainty fromand theregulatory EEA to the United Kingdom, that decision will sunsetdevelopments in Junethis 2025area, unless extended and it may be revoked in the future by the European Commission if the United Kingdom data protection regime is reformed in ways that deviate substantially from the GDPR. Ourour ability to continue to transfer personal information outside of the EU and UK may become significantly more costly and may subject us to increased scrutiny and liability under the GDPR or otherrelevant legal frameworks, and we may experience operating disruptions if we are unable to conduct these transfers in the future.

This section of Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2023,2024, filed with the SEC on MarchFebruary 1,27, 2024,2025, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.xperi.com.

We are a leading consumermedia and entertainment technology company. WeOur believetechnologies weare createintegrated extraordinaryinto experiencesconsumer atdevices, homeconnected cars, and ona the go for millionsvariety of consumersmedia aroundplatforms the world,worldwide, enabling our unique audiences to connect with entertainment content in a more intelligent, immersive, and personal way. PoweringAs smartour devices,audiences connectedengage cars,with entertainmentcontent experienceson andour more,platform, we bringoperate togethera ecosystemsglobal, designedcross-screen advertising solution that enables brands to reach highly-engagedmillions consumers,of allowingengaged usconsumers andacross our ecosystemrapidly partnersexpanding todigital uncoverentertainment significant new business opportunities, now and in the future. Our technologies are integrated into consumer devices and a variety of media platforms worldwide,ecosystem, driving increased value for our partners, customers, and consumers. We operate in one reportable business segment and group our revenue into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 1,6801,460 employees and more than 35 years of operating experience.

In December 2023, we entered into a definitive agreement with Tobii AB (“Tobii”),AB, an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “AutoSense Divestiture”). The AutoSense Divestiture was completed in January 2024 and has streamlined our business and further enhanced our focus on entertainment markets.

In August 2024, we entered into an Asset Purchase Agreement with Amazon.com Services LLC to sell substantially all of the assets and certain liabilities of Perceive Corporation (“Perceive”, later known as Xperi Pylon Corporation and subsequently dissolved in December 2024), a subsidiary focused on edge inference hardware and software technologies, for a gross amount of $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction (the “Perceive Transaction”) to secure our and Perceive Corporation’sPerceive’s indemnification obligations. The Perceive Transaction was completed onin October 2,2024, 2024allowing andus weto are nowbe fully focused on entertainment-based solutions to grow our independent media platform and licensing businesses.

We derive the majority of our revenue from licensing our technologytechnologies and solutions to customers. For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 3—Revenue of the Notes to Consolidated Financial Statements.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the year ended December 31, 20242025 was $113.8$126.6 million, as compared to $118.6$113.8 million for the year ended December 31, 2023,2024, aan decreaseincrease of $4.8$12.8 million, or 4%.11%. ThisThe decreaseincrease was primarily attributabledriven toby lowerhigher costs incurred in connectionassociated with a decrease in advertising revenue.revenue and increased personnel-related expenses.

Research, developmentResearch and other related costsdevelopment (“R&D expense”) costs consist primarily of employee-related costs, stock-based compensation (“SBC”) expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs. Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.

R&D expense for the year ended December 31, 20242025 was $191.4$135.1 million as compared to $222.8$191.4 million for the year ended December 31, 2023,2024, a decrease of $31.4$56.3 million, or 14%.29%. The decrease was primarily drivenattributable byto a reduction in R&D headcount, reduced expenses associated with the Perceive Transaction, lower researchSBC and developmentoutside spendservices costs, and lower R&D spending in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture, a reduction in expenses related to the Perceive business which was sold via the Perceive Transaction in the fourth quarter of 2024 and decreases in stock-based compensation and bonus expenses. These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction and severance charges incurred in 2024.Divestiture.

Selling expenses consist primarily of compensation and related costs (including stock-based compensationSBC expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade shows. General and administrative expenses consist primarily of compensation and related costs (including stock-based compensationSBC expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services. Our general and administrative expenses, other than facilities-related expenses and fringe benefits, are not allocated to other expense line items.

Selling, general and administrative expenses for the year ended December 31, 20242025 were $218.1$181.9 million as compared to $233.4$218.1 million for the year ended December 31, 2023,2024, a decrease of $15.3$36.2 million, or 7%.17%. TheThis decrease was primarily attributabledriven toby reduced employee headcountheadcount, aslower well as decreases in stock-based compensationSBC and bonusoutside services expenses, partiallyand offseta by an increasereduction in certain one-time transaction costs primarily related to the AutoSense Divestiture and the Perceive Transaction in 2024.costs.

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense was $13.4 million for the year ended December 31, 2025, as compared to $12.6 million for the year ended December 31, 2024, asan compared to $16.6 million for the year ended December 31, 2023, a decreaseincrease of $4.0$0.8 million, or 24%.6%. The decreaseincrease was primarily duedriven toby certainincreased fixedcapitalized assetsinternal-use becomingsoftware fully depreciatedcosts over the past 12 months.

As a result of intangible assets we acquired in previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years. See Note 8—Goodwill impairment and Intangible Assets, Net of the Notes to Consolidated Financial Statements for additional detail.

The following table sets forth our stock-based compensation (“SBC”) expense for the years ended December 31, 20242025 and 20232024 (in thousands):

We recognized stock-based compensationSBC expense from restricted stock units (“RSUs”) and purchases made under our employee stock purchase plan (“ESPP”). The decrease in SBC expense for the year ended December 31, 2024,2025, when compared to the prior year, was primarily driven by reduced employee headcount, lower expense for performance-based restricted stock unitsawards and reducedRSUs employeegranted headcountover intime 2024.at lower valuations.

Interest and other income, net, was lowerhigher in 2024 as2025 compared to the prior yearyear, principallyprimarily due to the absence of a one-time, non-cash loss of $4.8 million resultingrelated fromto the deconsolidation of the Perceive subsidiary in 2024, partiallyas offsetwell byas anforeign increasecurrency transaction gains recognized in accrued and accreted interest income of approximately $3.0 million on the Tobii Note and Deferred Consideration (as defined in Note 7—Acquisitions And Divestitures) from the AutoSense Divestiture.2025.

As disclosed in Note 7—AcquisitionsDivestitures andof Divestitures,the Notes to the Consolidated Financial Statements, we completed the AutoSense Divestiture onin January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets. Upon the completion of the AutoSense Divestiture, we recognized a pre-tax gain of $22.9 millionmillion. in 2024. OnIn October 2, 2024, we closed the Perceive Transaction bythrough sellingthe sale of substantially all theof Perceive’s assets and certain liabilitiesliabilities, ofresulting Perceive. As a result of completingin the Perceiverecognition Transaction, we recordedof a pre-tax gain of $77.9 million in the year ended December 31, 2024.

WeThere didwere notno recognizedivestitures any gain on divestiture induring the year ended December 31, 2023.2025.

In April 2024, our Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of our common stock (the “Program”). Under the Program, we may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program. As of December 31, 2024,2025, we have repurchased a total of approximately 2.2 million shares of common stock, since inception of the Program, at an average price of $9.23 per share for a total cost of approximately $20.0 million. We did not repurchase any common stock during the year ended December 31, 2025. As of December 31, 2024,2025, the total remaining amount available for repurchase was $80.0 million. We may continue to execute authorized repurchases from time to time under the Program. There is no guarantee that such repurchases under the Program will enhance the value of our common stock.

Our capital expenditures for property and equipment consist primarily of capitalized internal-use software, purchases of computer hardware and software, capitalized internal-use software, information systems, and production and test equipment. We expect capital expenditures in 20252026 to be approximately $20.0 million. These expenditures are expected to be paid with existing cash and cash equivalents. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs.

Short-TermLong-Term Debt Financing

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) onin July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, all of which was outstanding at December 31, 2024. Indebtedness outstanding under the Promissory Note bearsbore an interest rate of 6.00% per annum, subject to certain potential adjustments as described in Note 9—Debt to the Consolidated Financial Statements included in this Form 10-K.adjustments. The Promissory Note matureswas scheduled to mature on July 1, 2025. We may,were permitted, at any time and on any one or more occasions, to prepay all or any portion of the outstanding principal amount, plus accrued and unpaid interest, if any, under the Promissory Note without premium or penalty. On February 21, 2025, we voluntarily made a full principal payment of $50.0 million plus accrued interest by using a combination of cash on hand and a new long-term financing facility through the securitization of our accounts receivable as described below.

On February 21, 2025, we and Xperi SPV LLC (“Xperi SPV”), a wholly-owned special purpose subsidiary, entered into a Receivables Financing Agreement (the “RFA”) with PNC Bank, National Association (“PNC”),PNC, and PNC Capital Markets LLC, and a Sale and Contribution Agreement (the “SCA,” and, together with the RFA, the “RF Agreements”) among us, Xperi SPV and certain of our other wholly-owned subsidiaries to establish an accounts receivable securitization program (the “AR Facility”).Facility. Interest is payable on a monthly basis. The AR Facility is scheduled to terminate on February 21, 2028, unless terminated earlier pursuant to its terms. For a detailed description of the AR Facility, refer to Note 189—Debt Subsequentand Event.Receivables Securitization of the Notes to the Consolidated Financial Statements.

Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility.Facility and selected the monthly Term SOFR Rate (as defined in the RFA). The RF Agreements contain various covenants that we believe are usual and customary. The interest payments on the AR Facility debt, exclusive of the debt issuance costs and related amortization, are expected to be approximately $2.5$2.4 million infor 2025the next 12 months and may vary with changes in interest rates. In December 2025, we repaid $1.1 million of the outstanding principal as the aggregate outstanding principal at the time temporarily exceeded the eligibility limit of the receivables and subsequently drew down the same amount. As of December 31, 2025, we were in compliance with the covenants under the RF Agreements.

We believe our current cash and cash equivalentsequivalents, together with borrowings or availability under our AR Facility, will be sufficient to meet our needs for at least the next 12 months from the issuance date of the Consolidated Financial Statements included in this FormAnnual 10-K.Report. As we assess growth strategies, we may need to supplement our cash and cash equivalents with additional outside sources. As part of our liquidity strategy, we will continue to monitor our earnings and cash flow as well as our ability to access the capital markets as needed.

Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect. Equity or additional debt financing may not be available when needed or, if available, equity or debt financing may not be on terms satisfactory to us. Additionally, disruption and volatility in the global capital markets and economic uncertainties, including those driven by tariffs, have impacted corporate and consumer confidence and could continue to impact our capital resources and liquidity in the future.

We may supplement our short-term liquidity needs with access to capital markets, if necessary, and further strategic cost savings initiatives. Our access to capital markets may be constrained and our cost of borrowing may increase under certain business and market conditions, and our liquidity is subject to various risks including the risks identified in “Risk Factors” included in Part I, Item 1A of this Form 10-K.

Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of intangible assets, business combinations, recognition and measurement of deferred income tax assets and liabilities, and the assessment of unrecognized tax benefits. Actual results could differ from those estimates, and material effects on our operating results and financial position may result.

We do not typically receive license revenue from our TiVo OS arrangements with manufacturers, and we expect to incur significant expenses in connection with these commercial agreements. In addition, Pay-TV’s broadband-only offerings generate lower licensing fees compared to our other Pay-TV offerings. The primary economic benefits that we expect to derive from these license arrangements are indirect, primarily from growing the number of active users to generate advertising-relatedadvertising and related revenue. If these arrangements do not result in an increase in active users, or if that growth does not result in an increase in advertising-relatedadvertising and related revenue, our business may be harmed. If we are not successful in maintaining existing and creating new relationships with manufacturing partners and Pay-TV operators, or if we encounter technological, content licensing, or other impediments to these relationships, our ability to grow our business could be adversely impacted. For example, increased demand arising from artificial intelligence infrastructure growth has constrained the availability of memory chips and increased their cost, which has led and may continue to lead some consumer electronics manufacturers to reduce their inventory forecast, forecast lower sales, or increase the pricing of their products, which has resulted in, and could continue to result in lower sales.sales and the need for us to devote resources towards reducing the memory requirements of our TiVo OS. If our manufacturing partners continue to reduce their forecasts or delay the market launch dates for distributing Smart TVs or other streaming devices with TiVo OS or we are not successful in our efforts to reduce the memory requirements of our TiVo OS, our business may continue to be harmed.

We are a leading media and entertainment technology company. Our technologies are integrated into consumer devices, connected cars, and a variety of media platforms worldwide, enabling our unique audiences to connect with entertainment content in a more intelligent, immersive, and personal way. As our audiences engage with content on our platform,platforms, we operate a global, cross-screen advertising solution that enables brands to reach millions of engaged consumers across our rapidly expanding digital entertainment ecosystem, driving increased value for our partners, customers, and consumers. We operate in one reportable business segment and group our revenue into four categories: Pay-TV, Consumer Electronics, Connected Car and Media Platform. Headquartered in Silicon Valley with operations around the world, we have approximately 1,380 employees and more than 35 years of operating experience.

Macroeconomic conditions—conditions, including geopolitical conflicts in the Middle East, disruptions in global energy supplies, memory chip shortages, inflationary pressures, elevated interest rates, recessionary risks, volatility in financial and credit markets, changes in economic policy, reduced discretionary spending, tariffs, and global supply chain disruptions—disruptions, have adversely affected, and may continue to adversely affect, our business and the businessesbusiness of our customers. While we closely monitor these developments and adjust our strategies where appropriate, the extent and duration of their impact on our business, operating results, and financial condition remain uncertain.

In November 2025, we approved a restructuring plan designed to improve cost efficiency and better align our operating structure with our long-term strategies and prevailing market conditions. The plan involved a reduction of approximately 250 employees across all business and functional areas and became effective immediately. In connection with this plan, we incurred restructuring and related charges of $13.9 million and $0.3 million in the fourth quarter of 2025 and the first quarterhalf of 2026, respectively, substantially all of which consisted of employee severance and related costs. As of MarchJune 31,30, 2026, approximatelythe $1.0remaining millionamount of accrued restructuring charges remainedwas accrued and are expected to be substantially settled by the end of the second quarter of 2026.immaterial. Upon completion, we estimate that the reductions will generate annualized savings in the range of approximately $30 million to $35 million. For further information, refer to Note 14—Restructuring of the Notesnotes to Condensedcondensed Consolidatedconsolidated Financialfinancial Statements.statements.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

TheseLicensing increasesand wereother revenue increased by $3.3 million, or 3%, for the three months ended June 30, 2026 compared to the same period in the prior year. The increase was primarily driven by a $15.0 million increase in Connected Car revenue, mainly due to higher minimum guarantee (“MG”) revenue from HD Radio and music metadata. This increase was partially offset by a $4.4$6.5 million decrease in Consumer Electronics revenue, primarily attributabledue to the absence of certain MG and settlement revenue recognized in the priorprior-year year,period, asand wella as$5.3 memory-relatedmillion challengesdecrease in certainPay-TV endrevenue, product categories. Pay‑TV revenue decreased by $3.9 million,primarily reflecting declines in core guide products, consumer hardware,products and related subscription revenue. This decline wasrevenue, partially offset by continued growth in TiVo video-over-broadband (“IPTV”) solutions.

Cost of Licensing and Other Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of licensing and other revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, content and data costs, royalties paid to third parties, content and data costs, hosting fees, service center expenses, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings and non-recurring engineering services.

Cost of licensing and other revenue, excluding depreciation and amortization of intangible assets, for the three months ended MarchJune 31,30, 2026 was $30.9$19.8 million, as compared to $29.6$22.1 million forin the same period inof the prior year, representinga an increasedecrease of $1.3$2.3 million, or 4%.10%. The increasedecrease was primarily attributabledriven toby higherlower employee-related costs associatedresulting withfrom advertisingrestructuring revenue.activities, as well as reduced hardware-related costs following the discontinuation of hardware product sales by the end of 2025.

Research and development (“R&D”) costsexpenses consist primarily of employee-related costs, stock-based compensation (“SBC”) expense, engineering consulting expenses associated with new product and technology development, product commercialization, quality assurance and testing costs, as well as other costs related to patent applications and examinations, materials, supplies, and an allocation of facilities costs. Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.

R&D expenseexpenses for the three months ended MarchJune 31,30, 2026 was $27.1$21.8 million, as compared to $39.5$29.8 million forin the same period inof the prior year, representing a decrease of $12.4$8.0 million, or 32%.27%. The decrease was primarily driven by lower employee-related costs associatedresulting withfrom restructuring activities andactivities, reduced SBC expense.expense, and lower spending on outside services.

Selling, general and administrative expenses for the three months ended MarchJune 31,30, 2026 were $41.8$41.5 million, as compared to $48.7$41.1 million forin the same period inof the prior year, representingan a decreaseincrease of $6.9$0.4 million, or 14%.1%. The decreaseincrease was primarily attributable to higher bonus and commission expenses, partially offset by lower employee-relatedemployee salary-related costs resulting from restructuring activities,activities reducedand lower SBC expense, and decreased information technology spending.expense.

The following table sets forth our SBC expense for the three and six months ended MarchJune 31,30, 2026 and 2025 (in thousands):

We recognized SBC expense from restricted stock units (“RSUs”) and purchases made under our employee stock purchase plan (“ESPP”). The decreasedecreases of $4.3$3.5 million and $7.8 million in SBC expense for the three and six months ended MarchJune 31,30, 2026, respectively, when compared to the same periodperiods of the prior year, was primarily driven by reduced employee headcount, and RSUs granted over time at lower valuations.valuations, and lower expense for performance-based restricted stock awards.

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements. Depreciation expense for the three months ended MarchJune 31,30, 2026 was $4.3$4.0 million, as compared to $2.9$3.4 million in the same period of the prior year, an increase of $1.4$0.6 million, or 47%.15%. The increase was primarily driven by increased capitalized internal-use software costs over the pastpreceding 12 months.

We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense forFor the three and six months ended MarchJune 31,30, 20262026, wasamortization $8.0expense decreased by $1.1 million and $2.7 million, or 12% and 14%, respectively, as compared to $9.7 million in the same periodperiods of the prior year, a decrease of $1.7 million, or 17%.year. The decreasedecreases waswere primarily due to certain intangible assets becoming fully amortized over the pastpreceding 12 months.

As a result of intangible assets we acquired in previous mergers and acquisitions, we anticipate that amortization expenses will continue to be a significant expense over the next several years. See Note 7—Goodwill and Intangible Assets, Net of the Notes to Condensed Consolidated Financial Statements (unauditedUnaudited) for additional detail.

Interest and other income, net, was lower in the three months ended MarchJune 31,30, 2026, as compared to the same period in the prior year, principally due to foreign currency transaction losses recognized induring the firstsecond quarter of 2026.

The interestInterest expense on our debt wasdid $0.7not millionchange inmaterially for the three and six months ended MarchJune 31,30, 2026 and remained constant when2026, compared towith the samecorresponding periodperiods in the prior year.

For the three and six months ended MarchJune 31,30, 2026, we recorded an income tax expense of $10.1$4.8 million and $14.9 million on a pretax income of $2.3$3.3 million and $5.6 million, respectively; which resulted in an effective tax rate of 441.4%.145.1% and 266.0%, respectively. The income tax expense for the three and six months ended MarchJune 31,30, 2026 was primarily related to foreign income taxes and foreign withholding taxes.

For the three and six months ended MarchJune 31,30, 2025, we recorded an income tax expense of $3.5$4.6 million and $8.1 million on a pretax loss of $14.9$10.1 million and $25.0 million, respectively; which resulted in an effective tax rate of (23.545.7)%.% and (32.5)%, respectively. The income tax expense for the three and six months ended MarchJune 31,30, 2025 was primarily related to foreign withholding taxes and foreign income taxes.

Our primary sources of liquidity and capital resources are our cash and cash equivalents and borrowings available under anour accounts receivable securitization program (the “AR Facility”) with PNC Bank, National Association and PNC Capital Markets LLC (“PNC”). Cash and cash equivalents were $70.4$90.6 million atas Marchof June 30, 2026, compared to $96.8 million as of December 31, 2026,2025, a decrease of $26.4$6.2 million. The decrease was primarily driven by $3.5 million from $96.8 million at December 31, 2025. This decrease resulted primarily fromof cash used in operationsoperating ofactivities, $18.0 million, $4.8$11.8 million of capital expenditures, including capitalized internal-use software costs, and $3.6$4.4 million inof payments offor withholding taxes onrelated to the net share settlement of equity awards. These decreases were partially offset by $2.1 million of proceeds from the issuance of common stock under our ESPP and the receipt of a $12.0 million indemnification holdback payment in full related to the Perceive divestiture, of which $11.3 million was classified as a financing activity. For detailed information regarding the AR Facility, refer to “Long-Term Debt Financing” below. Subsequent to quarter end, on April 6, 2026, we received the $12.0 million indemnification holdback related to the Perceive Transaction completed in 2024.

In April 2024, our Board of Directors (the “Board”) authorized the repurchase of up to $100.0 million of our common stock (the “Program”). Under the Program, we may make repurchases, from time to time, through open market purchases, block trades, privately negotiated transactions, accelerated share repurchase transactions, or other means. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program. As of MarchJune 31,30, 2026, we have repurchased a total of approximately 2.2 million shares of common stock, since inception of the Program, at an average price of $9.23 per share for a total cost of approximately $20.0 million. We did not repurchase any common stock during the threesix months ended MarchJune 31,30, 2026. As of MarchJune 31,30, 2026, the total remaining amount available for repurchase was $80.0 million. We may continue to execute authorized repurchases from time to time under the Program. There is no guarantee that such repurchases under the Program will enhance the value of our common stock.

Net cash used in operating activities was $18.0$3.5 million for the threesix months ended MarchJune 31,30, 2026, primarily due to our net loss of $7.8$9.3 million being further adjusted by $28.2$32.4 million of changes in operating assets and liabilities, including an increase of $17.8$22.1 million in unbilled contracts receivable and payment of employee annual bonuses for 2025 performance, partially offset by non-cash items such as SBC expense of $7.8$14.7 million, amortization of intangible assets of $8.0$16.1 million, and depreciation expense of $4.3$8.2 million.

Net cash used in operating activities was $22.3$12.2 million for the threesix months ended MarchJune 31,30, 2025, primarily due to our net loss of $18.4$33.1 million being further adjusted by $28.4$26.1 million of changes in operating assets and liabilities, including payment during the quarter of employee annual bonuses for 2024 performance, partially offset by non-cash items such as SBC expense of $12.1$22.4 million, amortization of intangible assets of $9.7$18.9 million, and depreciation expense of $2.9$6.4 million.

Net cash used in investing activities was $4.8$11.8 million and $4.2$9.0 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, which was related to capital expenditures, including capitalized internal-use software.

Our capital expenditures for property and equipment consist primarily of capitalized internal-use software, purchases of computer hardware and software, capitalized internal-use software, information systems, and production and test equipment. We expect capital expenditures in 2026 to be approximately $20.0$25.0 million.million, Thesean increase of approximately $5.0 million from our original expectation, due primarily to continued constraints in the memory market, which have increased the cost of planned capital equipment purchases, as well as incremental investments to reduce memory requirements in our software platforms in response to partner demand. We expect these expenditures are expected to be paidfunded with existing cash and cash equivalents. ThereHowever, there can be no assurance that our current expectations will be realized, and our plans areremain subject to change uponbased on further review of our capital expenditure needs.

Net cash used in financing activities was $16.1$14.3 million for the threesix months ended MarchJune 31,30, 2025, primarily due to $5.3the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note, and $6.3 million in payment of withholding taxes related to net share settlement of equity awards, and the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note as described in “Long-Term Debt Financing” below, partially offset by $40.0 million in loan proceeds borrowed under the AR Facility with PNC.PNC and $3.3 million in proceeds from the issuance of common stock under our ESPP.

Upon entering into the RF Agreements on February 21, 2025, we borrowed $40.0 million under the AR Facility and selected the monthly Term SOFR Rate (as defined in the RFA). The RF Agreements contain various covenants that we believe are usual and customary. The interest payments on the AR Facility debt, exclusive of the debt issuance costs and related amortization, are expected to be approximately $2.3 million for the next 12 months and may vary with changes in interest rates. In December 2025, we repaid $1.1 million of the outstanding principal as the aggregate outstanding principal at the time temporarily exceeded the eligibility limit of the receivables and subsequently drew down the same amount. As of MarchJune 31,30, 2026, we were in compliance with the covenants under the RF Agreements.

During the threesix months ended MarchJune 31,30, 2026, there were no significant changes in our critical accounting estimates. For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.