# Xperi Inc. (XPER)

Informational only - not investment advice.

CIK: 0001788999
SIC: 7372 Services-Prepackaged Software
SIC breadcrumb: [Services](/division/I/) > [Business Services](/major-group/73/) > [SIC 7372 Services-Prepackaged Software](/industry/7372/)
Latest 10-K filed: 2026-02-26
SEC page: https://www.sec.gov/edgar/browse/?CIK=1788999
Filing source: https://www.sec.gov/Archives/edgar/data/1788999/000119312526076849/xper-20251231.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 448105000 | USD | 2025 | 2026-02-26 |
| Net income | -56339000 | USD | 2025 | 2026-02-26 |
| Assets | 615829000 | USD | 2025 | 2026-02-26 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001788999.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  | 376,101,000 | 486,483,000 | 502,260,000 | 521,334,000 | 493,688,000 | 448,105,000 |
| Net income |  | -138,327,000 | -175,622,000 | -757,484,000 | -136,613,000 | -14,008,000 | -56,339,000 |
| Operating income |  | -152,563,000 | -161,828,000 | -749,432,000 | -129,637,000 | -87,075,000 | -43,731,000 |
| Diluted EPS |  | -3.29 | -4.18 | -18.02 | -3.18 | -0.31 | -1.23 |
| Operating cash flow |  | -23,777,000 | -23,453,000 | -28,445,000 | 62,000 | -55,340,000 | -515,000 |
| Capital expenditures |  | 6,601,000 | 8,893,000 | 13,103,000 | 6,815,000 | 5,043,000 | 5,384,000 |
| Share buybacks |  |  |  |  | 0.00 | 19,990,000 | 0.00 |
| Assets |  |  | 1,228,712,000 | 736,911,000 | 673,635,000 | 667,760,000 | 615,829,000 |
| Liabilities |  |  | 212,755,000 | 287,925,000 | 286,500,000 | 238,683,000 | 201,754,000 |
| Stockholders' equity | 713,970,000 | 1,080,183,000 | 1,015,957,000 | 448,986,000 | 387,135,000 | 429,077,000 | 414,075,000 |
| Cash and cash equivalents |  |  | 120,695,000 | 160,127,000 | 142,085,000 | 130,564,000 | 96,824,000 |
| Free cash flow |  | -30,378,000 | -32,346,000 | -41,548,000 | -6,753,000 | -60,383,000 | -5,899,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  | -36.78% | -36.10% |  | -26.20% | -2.84% | -12.57% |
| Operating margin |  | -40.56% | -33.26% | -149.21% | -24.87% | -17.64% | -9.76% |
| Return on equity |  | -12.81% | -17.29% | -168.71% | -35.29% | -3.26% | -13.61% |
| Return on assets |  |  | -14.29% | -102.79% | -20.28% | -2.10% | -9.15% |
| Liabilities / equity |  |  | 0.21 | 0.64 | 0.74 | 0.56 | 0.49 |
| Current ratio |  |  | 2.31 | 2.21 | 1.92 | 1.64 | 2.42 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001788999.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | -9.54 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | -0.76 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 126,872,000 | -39,364,000 | -0.90 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 130,390,000 | -42,072,000 | -0.96 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 137,233,000 | -25,313,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 118,844,000 | -13,371,000 | -0.29 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 119,591,000 | -30,631,000 | -0.67 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 132,891,000 | -19,831,000 | -0.37 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 122,362,000 | 62,964,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 114,033,000 | -18,366,000 | -0.41 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 105,933,000 | -14,781,000 | -0.32 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 111,632,000 | -6,107,000 | -0.13 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 116,507,000 | -17,085,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 114,206,000 | -7,826,000 | -0.17 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1788999/000178899926000013/xper-20260331.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-05-07
Report date: 2026-03-31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis is intended to promote understanding of our results of operations and financial condition and should be read in conjunction with the attached unaudited condensed consolidated financial statements and notes thereto, and with our audited financial statements and notes thereto for the fiscal year ended December 31, 2025 found in our Form 10-K filed by Xperi Inc. (“Xperi,” the “Company” “we,” “us,” “our,” and similar references) on February 26, 2026 (our “Form 10-K”).

Business Overview

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, 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

Macroeconomic 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—have adversely affected, and may continue to adversely affect, our business and the businesses 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.

Restructuring Activities

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 quarter of 2026, respectively, substantially all of which consisted of employee severance and related costs. As of March 31, 2026, approximately $1.0 million of restructuring charges remained accrued and are expected to be substantially settled by the end of the second quarter of 2026. 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 Notes to Condensed Consolidated Financial Statements.

27

Results of Operations

The following table presents our historical operating results for the periods indicated as a percentage of revenue:

Three Months Ended March 31,

2026

2025

Revenue

100

%

100

%

Operating expenses:

Cost of revenue, excluding depreciation and amortization of intangible assets

27

26

Research and development

24

35

Selling, general and administrative

36

43

Depreciation expense

4

2

Amortization expense

7

8

Total operating expenses

98

114

Operating income (loss)

2

(14

)

Interest and other income, net

1

2

Interest expense - debt

(1

)

(1

)

Income (loss) before taxes

2

(13

)

Provision for income taxes

9

3

Net loss

(7

)%

(16

)%

Comparison of the Three Months Ended March 31, 2026 and 2025

Revenue

We derive the majority of our revenue from licensing our technologies and solutions to customers. For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 2—Revenue of the Notes to the Condensed Consolidated Financial Statements (Unaudited).

Three Months Ended March 31,

2026

2025

$ Change

% Change

(dollars in thousands)

Revenue

$

114,206

$

114,033

$

173

0

%

Revenue increased by $0.2 million, or approximately 0%, for the three months ended March 31, 2026, compared to the same period in the prior year. The increase was primarily driven by $8.5 million of growth in Connected Car and Media Platform revenue, partially offset by declines of $8.3 million in Consumer Electronics and Pay-TV revenue.

Connected Car revenue increased by $4.8 million compared to the first quarter of 2025, primarily due to higher minimum guarantee (“MG”) revenue from HD Radio. Media Platform revenue increased by $3.7 million, driven mainly by higher revenue from advertising and increased middleware solutions revenue.

These increases were partially offset by a $4.4 million decrease in Consumer Electronics revenue, primarily attributable to the absence of certain MG and settlement revenue recognized in the prior year, as well as memory-related challenges in certain end product categories. Pay‑TV revenue decreased by $3.9 million, reflecting declines in core guide products, consumer hardware, and related subscription revenue. This decline was partially offset by continued growth in TiVo video-over-broadband (“IPTV”) solutions.

28

Operating Expenses

Three Months Ended March 31,

2026

2025

$ Change

% Change

(dollars in thousands)

Cost of revenue, excluding depreciation and amortization of intangible assets

$

30,880

$

29,599

$

1,281

4

%

Research and development

27,083

39,549

(12,466

)

(32

)%

Selling, general and administrative

41,787

48,698

(6,911

)

(14

)%

Depreciation expense

4,261

2,905

1,356

47

%

Amortization expense

8,044

9,722

(1,678

)

(17

)%

Total operating expenses

$

112,055

$

130,473

$

(18,418

)

(14

)%

Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, content and data costs, hosting fees, 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 revenue, excluding depreciation and amortization of intangible assets, for the three months ended March 31, 2026 was $30.9 million, compared to $29.6 million for the same period in the prior year, representing an increase of $1.3 million, or 4%. The increase was primarily attributable to higher costs associated with advertising revenue.

Research and Development

Research and development (“R&D”) 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 three months ended March 31, 2026 was $27.1 million, compared to $39.5 million for the same period in the prior year, representing a decrease of $12.4 million, or 32%. The decrease was primarily driven by lower employee-related costs associated with restructuring activities and reduced SBC expense.

Selling, General and Administrative

Selling expenses consist primarily of compensation and related costs (including SBC 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 SBC 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 three months ended March 31, 2026 were $41.8 million, compared to $48.7 million for the same period in the prior year, representing a decrease of $6.9 million, or 14%. The decrease was primarily attributable to lower employee-related costs resulting from restructuring activities, reduced SBC expense, and decreased information technology spending.

29

Stock-based Compensation

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

Three Months Ended March 31,

2026

2025

Cost of revenue, excluding depreciation and amortization of intangible assets

$

656

$

1,044

Research and development

2,263

4,423

Selling, general and administrative

4,917

6,635

Total stock-based compensation expense

$

7,836

$

12,102

We recognized SBC expense from restricted stock units and purchases made under our employee stock purchase plan (“ESPP”). The decrease of $4.3 million in SBC expense for the three months ended March 31, 2026, when compared to the same period of the prior year, was primarily driven by reduced employee headcount, and RSUs granted over time at lower valuations.

Depreciation Expense

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

Amortization Expense

We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense for the three months ended March 31, 2026 was $8.0 million, as compared to $9.7 million in the same period of the prior year, a decrease of $1.7 million, or 17%. The decrease was primarily due to certain intangible assets becoming fully amortized 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 7—Intangible Assets, Net of the Notes to Condensed Consolidated Financial Statements (unaudited) for additional detail.

Interest and Other Income, Net

Three Months Ended March 31,

2026

2025

$ Change

% Change

(dollars in thousands)

Interest and other income, net

$

819

$

2,295

$

(1,476

)

(64

)%

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

Interest Expense—Debt

Three Months Ended March 31,

2026

2025

$ Change

% Change

(dollars in thousands)

Interest expense - debt

$

(678

)

$

(732

)

$

54

(7

)%

The interest expense on debt was $0.7 million in the three months ended March 31, 2026 and remained constant when compared to the same period in the prior year.

Provision for Income Taxes

For the three months ended March 31, 2026, we recorded an income tax expense of $10.1 million on a pretax income of $2.3 million, which resulted in an effective tax rate of 441.4%. The in

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to promote understanding of the results of operations and financial condition and should be read in conjunction with our consolidated financial statements and notes thereto. This discussion may contain forward-looking statements that reflect the plans, estimates and beliefs of Xperi. The words “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “will,” “intends,” “potentially,” “projects,” “targets,” or other words of similar meaning and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under Item 1A, “Risk Factors” and elsewhere in this report. We disclaim and do not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law.

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 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, 2024, filed with the SEC on February 27, 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.

Business Overview

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, 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 1,460 employees and more than 35 years of operating experience.

Divestitures

In December 2023, we entered into a definitive agreement with 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’s indemnification obligations. The Perceive Transaction was completed in October 2024, allowing us to be fully focused on entertainment-based solutions to grow our independent media platform and licensing businesses.

Macroeconomic Conditions

Macroeconomic conditions—including rising inflation and interest rates, recessionary concerns, financial and credit market volatility, shifts in economic policy, reduced discretionary spending by consumers and businesses, tariffs, and global supply chain disruptions—have adversely affected, and may continue to affect, our business and that of our customers. While we remain committed to closely monitoring these macroeconomic developments and intend to adapt our business strategies as needed, the ultimate impact on our business, operating results, and financial condition remains uncertain.

Restructuring Activities

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 in 2025, substantially all of which consisted of employee severance and related costs. These charges are reflected within cost of revenue (excluding depreciation and amortization of intangible assets),

51

research and development, and selling, general and administrative expenses in our Consolidated Statements of Operations. We expect to substantially complete the restructuring activities by the end of the first half of 2026. 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 15—Restructuring Activities of the Notes to Consolidated Financial Statements.

Results of Operations

The following table presents our historical operating results for the periods indicated as a percentage of revenue:

Year Ended December 31,

2025

2024

Revenue

100

%

100

%

Operating expenses:

Cost of revenue, excluding depreciation and amortization of intangible assets

28

23

Research and development

30

39

Selling, general and administrative

41

44

Depreciation expense

3

3

Amortization expense

8

9

Impairment of long-lived assets

—

—

Total operating expenses

110

118

Operating loss

(10

)

(18

)

Interest and other income, net

2

1

Interest expense - debt

(1

)

(1

)

Gain on divestitures

—

20

(Loss) income before taxes

(9

)

2

Provision for income taxes

4

2

Net loss

(13

)%

—

%

Comparison of Fiscal Years Ended December 31, 2025 and 2024

Revenue

We derive the majority of our revenue from licensing our technologies 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.

The following table sets forth our revenue by year:

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Revenue

$

448,105

$

493,688

$

(45,583

)

(9

)%

Revenue decreased by $45.6 million, or 9%, for the year ended December 31, 2025 compared to the prior year, primarily due to a $54.0 million decline in Pay‑TV revenue and the impact of the AutoSense and Perceive divestitures. The decrease in Pay‑TV revenue was driven by lower revenue from core guide products, principally due to higher minimum guarantee (“MG”) revenue recognized in the prior year, as well as lower consumer hardware and related subscription revenue as certain products reached end of life in 2025. These decreases were partially offset by continued growth in IPTV solutions.

The overall decline was partially mitigated by a $13.2 million increase in Connected Car revenue, primarily reflecting higher MG and licensing revenue related to HD Radio. This increase was offset in part by a reduction in Audio Solutions revenue due to the absence of certain MG revenue recognized in the prior year.

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Operating Expenses

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Cost of revenue, excluding depreciation and amortization of intangible assets

$

126,648

$

113,756

$

12,892

11

%

Research and development

135,054

191,352

(56,298

)

(29

)%

Selling, general and administrative

181,869

218,106

(36,237

)

(17

)%

Depreciation expense

13,426

12,638

788

6

%

Amortization expense

34,839

43,376

(8,537

)

(20

)%

Impairment of long-lived assets

—

1,535

(1,535

)

(100

)%

Total operating expenses

$

491,836

$

580,763

$

(88,927

)

(15

)%

Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, content and data costs, hosting fees, 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 (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the year ended December 31, 2025 was $126.6 million, as compared to $113.8 million for the year ended December 31, 2024, an increase of $12.8 million, or 11%. The increase was primarily driven by higher costs associated with advertising revenue and increased personnel-related expenses.

Research and Development

Research and development (“R&D”) 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, 2025 was $135.1 million as compared to $191.4 million for the year ended December 31, 2024, a decrease of $56.3 million, or 29%. The decrease was primarily attributable to a reduction in R&D headcount, reduced expenses associated with the Perceive Transaction, lower SBC and outside services costs, and lower R&D spending in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture.

Selling, General and Administrative

Selling expenses consist primarily of compensation and related costs (including SBC 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 SBC 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, 2025 were $181.9 million as compared to $218.1 million for the year ended December 31, 2024, a decrease of $36.2 million, or 17%. This decrease was primarily driven by reduced employee headcount, lower SBC and outside services expenses, and a reduction in certain one-time transaction costs.

Depreciation Expense

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, an increase of $0.8 million, or 6%. The increase was primarily driven by increased capitalized internal-use software costs over the past 12 months.

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Amortization Expense

We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill. Amortization expense for the year ended December 31, 2025 was $34.8 million, as compared to $43.4 million for the year ended December 31, 2024, a decrease of $8.6 million, or 20%. The decrease was primarily due to certain intangible assets becoming fully amortized 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—Intangible Assets, Net of the Notes to Consolidated Financial Statements for additional detail.

Stock-based Compensation Expense

The following table sets forth our SBC expense for the years ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31,

2025

2024

Cost of revenue, excluding depreciation and amortization of intangible assets

$

3,385

$

3,216

Research and development

12,768

20,634

Selling, general and administrative

24,530

36,691

Total stock-based compensation expense

$

40,683

$

60,541

We recognized SBC 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, 2025, when compared to the prior year, was primarily driven by reduced employee headcount, lower expense for performance-based awards and RSUs granted over time at lower valuations.

Impairment of Long-Lived Assets

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Impairment of long-lived assets

$

—

$

1,535

$

(1,535

)

(100

)%

As disclosed in Note 10—Leases of the Notes to the Consolidated Financial Statements, we recognized an impairment charge of $1.5 million in 2024 related to certain operating lease right-of-use (“ROU”) assets. The impairment resulted from changes in the utilization of certain office facilities, a significant decline in the expected market value of those leased facilities, and anticipated delays in our ability to sublease vacated office space.

There was no impairment of long-lived assets during the year ended December 31, 2025.

Interest and Other Income, Net

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Interest and other income, net

$

6,093

$

829

$

5,264

635

%

Interest and other income, net, was higher in 2025 compared to the prior year, primarily due to the absence of a one-time, non-cash loss of $4.8 million related to the deconsolidation of the Perceive subsidiary in 2024, as well as foreign currency transaction gains recognized in 2025.

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Interest Expense—Debt

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Interest expense - debt

$

(2,979

)

$

(3,008

)

$

29

(1

)%

Interest expense on our debt remained consistent for the year ended December 31, 2025, compared to the prior year.

Gain on Divestiture

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Gain on divestiture

$

—

$

100,833

$

(100,833

)

NM

NM - not meaningful

As disclosed in Note 7—Divestitures of the Notes to the Consolidated Financial Statements, we completed the AutoSense Divestiture in January 2024 and recognized a pre-tax gain of $22.9 million. In October 2024, we closed the Perceive Transaction through the sale of substantially all of Perceive’s assets and certain liabilities, resulting in the recognition of a pre-tax gain of $77.9 million in the year ended December 31, 2024.

There were no divestitures during the year ended December 31, 2025.

Provision for Income Taxes

Year Ended December 31,

2025

2024

$ Change

% Change

(dollars in thousands)

Provision for income taxes

$

15,722

$

12,448

$

3,274

26

%

For the year ended December 31, 2025, we recorded an income tax expense of $15.7 million on a pretax loss of $40.6 million which resulted in an effective tax rate of (38.7)%. The income tax expense for the year ended December 31, 2025 was primarily related to foreign withholding taxes of $8.7 million and foreign income taxes of $7.5 million, partially offset by $0.7 million of federal tax benefit.

For the year ended December 31, 2024, we recorded an income tax expense of $12.4 million on a pretax income of $11.6 million, which resulted in an effective tax rate of 107.5%. The income tax expense of $12.4 million was primarily related to foreign withholding taxes of $10.9 million and U.S. federal income taxes of $3.7 million, partially offset by a tax benefit of $1.3 million from the release of valuation allowance of a foreign subsidiary.

At December 31, 2025, our 2021 through 2025 tax years are generally open to examination. In the United States, any net operating losses or credits that were generated in prior years but not yet fully utilized in a year that is closed under the statute of limitations may also be subject to examination.

The need for a valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more-likely-than-not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. In making such assessment, significant weight is given to evidence that can be objectively verified. After considering both positive and negative evidence to assess the recoverability of our net deferred tax assets, we determined that it was unlikely that we would realize a portion of our federal, certain state and certain foreign deferred tax assets. We intend to continue maintaining a valuation allowance on our federal deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain federal deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release depends on the level of profitability that we are able to achieve.

In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the U.S. The OBBBA did not have a material impact on our effective tax rate or cash flows for the year ended December 31, 2025.

55

Liquidity and Capital Resources

The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of December 31, 2025 and 2024 and for the years ended December 31, 2025 and 2024:

December 31,

2025

2024

(dollars in thousands)

Cash and cash equivalents

$

96,824

$

130,564

Current ratio (1)

2.4

1.6

(1)
The current ratio is a liquidity ratio that measures our ability to pay short-term obligations or those due within one year. The ratio is calculated by dividing current assets by current liabilities.

Year Ended December 31,

2025

2024

(in thousands)

Net cash (used in) operating activities

$

(515

)

$

(55,340

)

Net cash (used in) provided by investing activities

$

(20,984

)

$

50,820

Net cash (used in) financing activities

$

(12,241

)

$

(19,350

)

Our primary liquidity and capital resources are our cash and cash equivalents and borrowings available under an accounts receivable securitization program (the “AR Facility”) with PNC Bank, National Association (“PNC”). Cash and cash equivalents were $96.8 million at December 31, 2025, a decrease of $33.8 million from $130.6 million at December 31, 2024. This decrease resulted primarily from cash used in operations of $0.5 million, $50.0 million in repayment of the Vewd Software Holdings Limited (“Vewd”) senior unsecured promissory note, $21.0 million of capital expenditures, including capitalized internal-use software costs, and $7.0 million in payments of withholding taxes on net share settlement of equity awards, partially offset by $6.0 million in proceeds from the issuance of common stock under our ESPP, and $40.0 million of net loan proceeds borrowed under the AR Facility with PNC. For detailed information regarding the repayment of the Vewd debt and the AR Facility, refer to “Long-Term Debt Financing” below.

Our material cash requirements include the following contractual and other obligations.

Leases

We have lease arrangements for office and research facilities, data centers and office equipment. As of December 31, 2025, fixed lease payment obligations amounted to $35.4 million, with $10.7 million payable within 12 months. See Note 10—Leases of the Notes to Consolidated Financial Statements for additional information on lease obligations and maturities.

Purchase Obligations

Our purchase obligations primarily consist of noncancelable obligations related to advertising, engineering services and internet and telecommunications services. As of December 31, 2025, we had purchase obligations of $121.0 million, with $58.2 million payable within 12 months. These purchase obligations represent commitments under enforceable and legally binding agreements, and do not represent the entire anticipated purchases in the future. See Note 11—Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information on our purchase obligations.

Restructuring Payments

As discussed above, in November 2025, we approved a restructuring plan to reduce our global workforce by approximately 250 employees. In connection with this plan, we recognized $13.9 million of restructuring and related charges, substantially all of which consisted of employee severance and related costs. As of December 31, 2025, $8.7 million of restructuring charges remained accrued and are expected to be settled in the first half of 2026.

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Stock Repurchase Program

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, 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, 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.

Cash Flows

Cash Flows from Operating Activities

Net cash used in operating activities was $0.5 million for the year ended December 31, 2025, primarily due to our net loss of $56.3 million being further adjusted by $36.4 million of changes in operating assets and liabilities driven primarily by an increase of $18.0 million in unbilled contracts receivable, partially offset by non-cash items such as SBC expense of $40.7 million, amortization of intangible assets of $34.8 million, depreciation expense of $13.4 million, and changes in deferred income taxes of $2.3 million.

Net cash used in operations was $55.3 million for the year ended December 31, 2024, primarily due to our net loss of $0.9 million being further adjusted by $71.8 million of changes in operating assets and liabilities driven principally by an increase of $46.3 million in unbilled contracts receivable, and $100.8 million of a non-cash gain recognized from the AutoSense Divestiture and the Perceive Transaction. These changes were partially offset by material non-cash items such as stock-based compensation expense of $60.5 million, amortization of intangible assets of $43.4 million, and depreciation expense of $12.6 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $21.0 million for the year ended December 31, 2025, primarily related to capital expenditures, including capitalized internal-use software.

Net cash provided by investing activities was $50.8 million for the year ended December 31, 2024, primarily due to net proceeds from divestitures of $67.8 million, partially offset by capital expenditures of $16.8 million, including capitalized internal-use software.

Capital Expenditures

Our capital expenditures for property and equipment consist primarily of capitalized internal-use software, purchases of computer hardware and software, information systems, and production and test equipment. We expect capital expenditures in 2026 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.

Cash Flows from Financing Activities

Net cash used in financing activities was $12.2 million for the year ended December 31, 2025, primarily due to the $50.0 million voluntary repayment of the Vewd senior unsecured promissory note, and $7.0 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $40.0 million of net loan proceeds borrowed under the AR Facility with PNC and $6.0 million in proceeds from the issuance of common stock under our ESPP.

Net cash used in financing activities was $19.4 million for the year ended December 31, 2024, due to $20.0 million in repurchases of common stock under the Program and $7.2 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $7.9 million in proceeds from the issuance of common stock under the ESPP.

57

Long-Term Debt Financing

In connection with the acquisition of Vewd in July 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 bore an interest rate of 6.00% per annum, subject to certain potential adjustments. The Promissory Note was scheduled to mature on July 1, 2025. We 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 special purpose subsidiary, entered into a Receivables Financing Agreement (the “RFA”) with PNC, and PNC Capital Markets LLC, and a Sale and Contribution Agreement (together with the RFA, the “RF Agreements”) among us, Xperi SPV and certain of our other wholly-owned subsidiaries to establish the AR 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 9—Debt and 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 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 $2.4 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 December 31, 2025, we were in compliance with the covenants under the RF Agreements.

Liquidity

We believe our current cash and cash equivalents, 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 Annual 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.

Critical Accounting Estimates

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, 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.

58

We believe the following accounting estimates are most critical to understanding our consolidated financial statements. See Note 2—Summary of Significant Accounting Policies and Note 3—Revenue of the Notes to Consolidated Financial Statements for a full description of our accounting policies.

Revenue recognition

We derive the majority of our revenue from the licensing of our technologies to customers. Generally, revenue is recognized upon transfer of control of promised products, services, or licensing of our technologies to customers in an amount that reflects the consideration that we expect to receive in exchange for those products, services and licensing of the technologies. The primary judgments include estimating licensees’ quarterly royalties prior to receiving the royalty reports, estimating variable consideration, identifying the performance obligations in the contract, determining stand-alone selling price and the transaction price, and allocating consideration in an arrangement with multiple performance obligations.

We generally recognize royalty revenue from per-unit or per-subscriber licenses based on units shipped or manufactured, or number of subscribers. Revenue is recognized in the period in which the customer’s sales, production or usage are estimated to have occurred. This may result in an adjustment to revenue when actual sales, production or usage are subsequently reported by the customer, generally in the month or quarter following sales, production or usage. Estimating customers’ quarterly royalties and license fees prior to receiving the customer reports requires us to make significant assumptions and judgments related to forecasted trends and growth rates used to estimate quantities shipped or manufactured by customers or the number of subscribers, which could have a material impact on the amount of revenue we report on a quarterly basis.

Accounting for income taxes

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments are used in the calculation of tax credits, tax benefits and deductions, and in the calculation of tax assets and liabilities. Significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not more-likely-than-not, we must increase our provision for income taxes by recording a valuation allowance against our deferred tax assets. Should there be a change in our ability to recover our deferred tax assets, our provision for income taxes would fluctuate in the period of the change.

We account for uncertain tax positions in accordance with authoritative guidance related to income taxes. The calculation of our unrecognized tax benefits involves dealing with uncertainties in the application of complex tax regulations. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. We record unrecognized tax benefits for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to which, additional tax liabilities are more-likely-than-not assuming the tax authorities have full knowledge of all relevant information. If we ultimately determine that the tax liabilities are unnecessary, we reverse the liabilities and recognize a tax benefit during the period in which it occurs. This may occur for a variety of reasons, such as the expiration of the statute of limitations on a particular tax return or the completion of an examination by the relevant tax authority. We record an additional charge in our provision for taxes in the period in which we determine that the recorded unrecognized tax benefits are less than the expected ultimate settlement.

Our policy is to classify accrued interest and penalties related to the accrued liability for unrecognized tax benefits in the provision for income taxes. For the years ended December 31, 2025 and 2024, we recognized interest and penalties related to unrecognized tax benefits of $0.1 million and an immaterial amount, respectively. See Note 14—Income Taxes of the Notes to Consolidated Financial Statements for additional detail.

Recent Accounting Pronouncements

See Note 2—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective expected dates of adoption.

59