Xperi (NASDAQ:ADEA) Inc., a company specializing in prepackaged software services, has completed a significant asset sale to Amazon.com (NASDAQ:AMZN) Services LLC.
The transaction, which was finalized on Wednesday, involved the sale of assets and certain liabilities from Perceive Corporation, a subsidiary in which Xperi holds a 76.2% equity interest, for a total of $80 million in cash.
The deal, initially detailed in an Asset Purchase Agreement dated August 14, 2024, includes a holdback to secure Xperi's and Seller's indemnification obligations. After accounting for taxes, closing costs, and fees, Xperi anticipates net proceeds of approximately $52 million. The company also communicated its plan to allocate a portion of these proceeds towards repurchasing its common stock.
This strategic divestiture is expected to enhance Xperi's financial profile by improving its Adjusted EBITDA margin by roughly one percentage point on an annualized basis. This move is part of the company's broader efforts to streamline operations and focus on core business areas.
In other recent news, Xperi Holding Corporation reported a slight decrease in its Q2 2024 revenue, which stood at approximately $120 million, marking a 2% decrease year-over-year. However, the company's adjusted EBITDA notably increased, reaching $15 million, nearly tripling from the previous year.
Xperi's subsidiary, TiVo (NASDAQ:TIVO_old) Platform Technologies LLC, has also made advancements, doubling its operator partnerships for its TiVo Broadband service. This expansion includes an addition of over 200 Free Ad-Supported Streaming TV (FAST) channels in the United States. The growth in content offerings is partly due to strategic partnerships, aiming to boost viewership and create new revenue-sharing opportunities.
Despite a 40% drop in consumer electronics revenue and a 25% decrease in media platform revenue, Xperi saw a 41% increase in Connected Car revenue and a 5% growth in Pay TV revenue. Analysts from the earnings call highlight Xperi's strategic focus on connected TV advertising, in-cabin entertainment, and TiVo video-over-broadband as key growth opportunities.
InvestingPro Insights
To provide additional context to Xperi's recent asset sale and its financial outlook, let's examine some key metrics from InvestingPro. Despite the company's strategic move to improve its financial profile, Xperi is currently not profitable over the last twelve months, with a negative P/E ratio of -3.18. However, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, which aligns with Xperi's efforts to enhance its Adjusted EBITDA margin through the recent asset sale.
Another relevant InvestingPro Tip indicates that Xperi operates with a moderate level of debt. This could be seen as a positive factor as the company navigates its strategic repositioning and allocates proceeds from the asset sale. Additionally, Xperi boasts impressive gross profit margins, with the latest data showing a gross profit margin of 76.55% for the last twelve months as of Q2 2024. This strong margin could provide the company with financial flexibility as it focuses on its core business areas.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Xperi, providing a deeper understanding of the company's financial health and prospects.
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