Xperi’s settlement of a longstanding royalty battle with Comcast and its subsequent 24% stock growth may be hogging the headlines for the tech company. But for the radio industry, the more relevant news is Xperi’s update on the rollout of its DTS Connected Radio product, which the company provided late Monday during its third quarter earnings call.
Last week Xperi announced the Mercedes-Benz S-Class will offer the new advanced radio technology as part of the Daimler MB User Experience under a partnership with Daimler. On Wednesday it provided more details of the partnership, calling it a “significant milestone.”
During his opening remarks on the call, Xperi CEO Jon Kirchner said he expects Daimler “to roll the platform out more broadly across their product line.”
Apart from its luxury Mercedes-Benz passenger cars, Daimler’s fleet includes six truck brands and several passenger vans. “This is the first of many OEMs that we expect to implement our Connected Radio platform,” Kirchner told analysts. “The team has developed and delivered the most advanced next generation radio platform for automotive manufacturers.”
Utilizing an IP connection in a vehicle, Connected Radio combines over-the-air broadcast radio with internet-delivered content. The platform aggregates metadata, such as on-air radio program and talent information, artist and song information, station contact information and more, directly from broadcasters.
On a global basis, Kirchner said Connected Radio is available in 24,000 cities, 48 countries in 14 languages with content source from 76,000 radio stations. By 2025, Xperi expects the total addressable market for its automotive connected media platform will reach 75 million units worldwide.
Xperi is best known in vehicles for HD Radio. But not unlike SiriusXM, Xperi saw a slowdown in shipments of HD Radios this year due to lower new vehicle sales caused by supply chain disruptions automakers experienced from the pandemic. “We are seeing signs that the automotive market is starting to recover. We expect to see a recovery of our HD Radio shipments in line with the market trends,” Kirchner said, adding that the latest projection for car sales released in November calls for a 9% recovery in 2021.
During the quarter, HD Radio launched on 14 new 2020 car models in North America.
In another milestone, the FCC approved a proposal that will allow broadcasters to voluntarily power down their analog AM transmitters and serve the public with only a digital signal. Kirchner said the FCC decision allowing all-digital AM is important because “it builds on the existing broadcast standard for our technology and further encourages receiver manufacturers to incorporate HD Radio.”
HD Radio and DTS Connected Radio fall under Xperi’s Connected Car division, where third quarter revenue was $18.5 million, down 5.8% year-over-year, driven by lower car production from COVID-19.
Total revenue for TiVo parent Xperi in Q3 was $202.8 million, down 6.2% year-over-year. Operating cash flow for the quarter was $62.2 million, up from $45.1 million last year, while adjusted free cash flow was $66.4 million versus $46.5 million a year ago.