Xperi on Monday reported third quarter earnings and executives said it snagged a fourth, undisclosed, TV OEM partner to run its TiVo operating system, as the company pegged connected TV advertising as one of its key growth areas.
On the quarterly earnings call Xperi CEO Jon Kirchner said the latest OEM would integrate the TiVo OS into their European 2024 smart TV lineup, with the company anticipating more partner wins by the time it reports Q4 earnings next February. TiVo now has four TV OEM partners, but has only named two, including Vestel and Sharp.
Kirchner said the move is about responding to customers’ distinct strategies and Xperi plans to disclose partners in time. He reiterated expectations for distribution of its TiVo OS in the U.S. in 2024 among more than one of the four partners it’s signed.
More details are expected in February with the chief executive saying, “I think the pipeline remains very, very active and robust.”
So far the TiVo OS rollout has been focused on Europe. That includes Vestel, which has started shipping smart TVs running the TiVo OS under the JVC brand to retailers in the Czech Republic initially. Production on additional brands is underway, Kirchner said, with shipments expected to multiple European countries in the coming weeks. And as the smart TVs activate it gives Xperi an “improved line of sight” to a wider footprint in 2024, he noted.
According to Kirchner, TiVo has more confidence that it will achieve or exceed its original estimate of 7 million active TiVo OS users by the end of 2025, based on recent conversations with TVOS partners and rollout plans in Europe and the U.S.
In the TVOS space TiVo is competing with players such as Google, Roku, Amazon and more recently Xumo. It could also face more competition in the U.S. as just last week smart TV OEM Vizio disclosed exploring licensing its own TVOS to other third-party TV makers in the U.S.
Xperi executives previously told StreamTV Insider it sees opportunity in largely tier 2 OEMs that might lack the video technology infrastructure or scale to build their own system, but who want to maintain brand recognition and customer relationships.
Xperi’s media platform revenue in Q3 was up 52% year over year to $14.3 million, primarily due to revenue growth from its smart TV middleware solutions and quarterly timing of certain revenue. The company also saw sold and programmatic CTV advertising growth, which was somewhat offset by declines in media and entertainment advertising within its pay TV products due the writers and actors strike.
Kirchner said the ability to monetize its smart TV footprints is dependent on carving out and building up that footprint, and Xperi expects that as more units are shipped into the market in 2024 that monetization will ramp over time.
After officially completing a spin-off of its IP licensing business a year ago, revenue in the pay TV segment - Xperi’s largest revenue category - was up 3% year over year to $60 million following declines in the first half of the year. Growth was in part due to increases in its IPTV business, as TiVo now counts over 100 service providers deploying TiVo IPTV solutions to customers over broadband networks to offer video content and streaming applications.
“IPTV deployments also enable these companies to offer interactive and on-demand content, improving the overall user experience, generating additional revenue streams and increasing customer loyalty to their connected services,” Kirchner said.
In the quarter Xperi also signed five new video service providers for the TiVo+ free ad-supported streaming service, which offers up to 160 channels of curated content and where Xperi monetizes ad-supported viewing. TiVo+ is now deployed by 30 video service providers in the U.S.
And Xperi marked success in its connected car business for in-cabin entertainment. In the quarter its DTS AutoStage Video service powered by TiVo was integrated and deployed in the new generation BMW 5-Series vehicles, with plans to expand to other models. Connected car revenue in the quarter was $23 million.
Total third quarter revenue of $130 million was up 7% year over year. Xperi reported a net loss of $41 million and Adjusted EBITDA of $9 million in Q3.