I am so proud of our team as we reach our 1-year anniversary as a stand-alone company. The strides we have made, including the continued deal execution and patent portfolio expansion paints a very bright picture for our future. Our future is supported by our investments in technology development, which enables the evolution of both the media and semiconductor industries. As such, our pipeline remains strong, and we stay committed to the vision we initially set forth at separation. That brings it in to our prepared remarks. And with that, I’d like to turn the call over to the operator to begin our question-and-answer session. Operator?
Operator: [Operator Instructions] We’ll go first this afternoon to Nick Zangler at Stephens.
Nick Zangler: A few questions here. Starting with the top line guide. So 2 months to go for the year. Just wondering what the gating factor is now I guess, separating the low end of the range versus the high end. Wondering if you’re willing to provide whether that’s winning a new client, whether it’s a variable component of an existing deal or resigning an existing client, whatever variables they might be just looking for more clarity on what gets you to the low versus the high end of that range?
Keith Jones: Nick, thanks. Great question. So the guidance that we put at the $385 million to $395 million. First of all, just kind of start with the bottom of the range. Quite frankly, we kind of see that as the floor. And then just like anything else in terms of what we do, it’s really kind of coming to terms that we think are just really in the best interest of us on a go-forward basis. So that whole comment around deal economics means a lot. Our pipeline is very robust. We are in deep stages with many of our customers. But quite frankly, it comes down just to the economics that we think that we should get out of the deal versus not to be in a position where we feel like we’re forced to take something. So we have a lot of opportunities, and it’s just a matter of just, quite frankly, making sure that we get the proper economics.
Nick Zangler: Got it. And then obviously, a sizable chunk was removed on the OpEx side. That’s obviously in conjunction with the lower revenue guide. Can you just talk about where you were able to pull back within OpEx and so quickly?
Keith Jones: Great question, and to be very, very precise. It all has to do with our litigation expense primarily. That’s the biggest driver. Nick, if you recall, when we talked about our guidance in the beginning of the year and even at the time of separation, we had said we have been running historically at lower levels. Last year, we did about $10 million. And if you take a look at we were at the 9 months now, we’re at the same spot where we were at this time. We paid a little bit higher spend that’s not indicative of anything. It’s just really about timing. So that is the delta. But more precisely, what I’m really proud of is that if we take a look at the other line items being R&D and spend at SG&A. Those are really spot on from what we had forecasted.
So I take great pride that our variance from what we forecasted as a company. It’s — I’ll just say, very low single-digit delta from what we experienced. And if we take a look at that R&D and you heard Paul talk about in his track how great of a job that we’re doing for our patent innovation, we have not backed off that not 1 bit. So that spending is just really a matter of timing, and we’ve done a great job at that experience management as a company.
Paul Davis: Yes. Nick, maybe just I’ll add on that. I think what’s exciting for me is that we’ve been able to maintain that lower level of expense and still invest in what we really need to invest in. And so on the R&D front, we’ve filed more patents this year, new patents than I think we have in our history. It’s very exciting in terms of the innovation that we have going on here at Audio and it’s showing up in our new patent filings in a big way so far.
Nick Zangler: Great. And then just 1 final 1 for me, if you don’t mind. Obviously, so many moving parts here within the TV landscape. You’ve got this breach with Shaw you’ve got accelerating declines or churn within the pay TV segment, yet obviously, CTV continues to grow and proliferate. I know you guys had talked about targeting a $500 million revenue number, I think, by 2026 based on your prior outlook there. Just given all these different dynamics that are going on, how do you feel about that $500 million target now, do you still think that’s achievable, just given everything that’s been going on in the landscape?
Paul Davis: Yes. Thanks, Nick. Great question. And absolutely, I mean, we had factored in the pay-TV declines, and they’re more or less tracking where our forecasts were. And so none of it’s really been a surprise. We do think within that time frame, we’re going to turn around some of the headwinds we’ve had in Canada. But more importantly, our focus on growth really comes from 3 areas that give us confidence in achieving that number. . One is certainly new media, which is largely going to be driven by OTT. The second one, semiconductors, which we think is — can be very significant within that time period. And then the last 1 is the new verticals. And on each of those fronts, we’re seeing traction. So in OTT, obviously, we’ve signed 2 deals in the last 2 quarters, as I mentioned in my prepared remarks, we’re very excited about the progress that we’re making there.
