InterDigital (IDCC) 3 Aug 232023 Q2 Earnings call transcript

Good morning and thank you for standing by. Welcome to InterDigital Second Quarter 2023 Earnings Call. At this time all participants are in a listen-only. After the speaker’s presentation there will be a question-and-session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Garrabrant, conference Head like speaker to now Raiford today, of would hand over the your I Investor Relations. ahead. go Please

open Good for Chen, InterDigital. our to welcome me on Conference Raiford everyone, are Quarter With Head to Liren for quarter President and our call Brezski, call, Garrabrant, Relations Earnings Richard and company am and Call. InterDigital's quarter's highlights the offer up will some CFO. Investor we the of and today's XXXX then CEO; I questions. morning about Consistent Second the call with last and

I Before are we our begin to made the date only are not that our will which statements expectations, remarks, in we this as regarding of make guarantees and forward-looking need call hereof. of and you performance plans beliefs, current remind future

Forward-looking those in statements. our risks subject and by Report to uncertainties other differ cause events and XXXX our could risks from SEC These on Factors to and such events Form Annual in that described contemplated actual XX-K results the include and Risk results materially section of forward-looking filings. statements are and uncertainties

to addition, financial most is may today's to measures references financial directly Reconciliations the Investor metrics on In available our of in financial non-GAAP comparable of contain measures. GAAP our included website. measures these which are non-GAAP financial presentation the tracker, section Relations

I the over call turn to of, will taken care With that Liren.

capital us another strong deliver our Good today. to shareholders. again Thank quarter and was revenue our once Thanks our the joining of track recurring record and This added demonstrated you, Raiford. stable to business. momentum returning excellent continued recent to morning, for everyone. for strong profitability, We ability

on the with status start licensing. me Let update

new where the to solid licensee make added a We in smartphone QX. in continue space progress we

Alpine system including capitalizing and from our verticals. highlighting In by auto the opportunities a auto, of In almost closed technology multiple XX% Alps consumer first in we the again agreement electronics and year-over-year, IoT, the in the year, are recurring a new and revenue sector. IoT provider once specialist addition, half with we licensing the increased how

quarter, licensee sector. In third the addition, early added consumer in from another electronics we new

also arbitration the being hear management with arbitrators now case case will been three case who the advance And held has conference continue We Samsung, confirmed. today. to our the is

a Samsung license arbitration portfolio value more to As process already January reminder, has agreed of confident that a monetary than started take long-term remain with and years to Samsung our reflect the will terms. decide where Samsung XXXX, with the continue our XX license our relationship We new the will that our X, effective portfolio ago.

want I our decision to the received revenue amount from you Lenovo. Lenovo. recognition and the our million, to XG with to High remarks. good $XXX in from topic Lenovo us which will we Next, give U.K. another for Rich his Recently, Court, update which the on patents XG, just we XG pay received explain under license increased an must litigation already

sales is ruling, us for going full for back to Lenovo the a positive us. as past very [XXXX] must And pay previous the the This in to (ph). development court's

As you and that not each to technology our remind does and powerful license fair receive until portfolio day. implementation want I committed judgment only is our full And that It license. the to of uses include licenses million in court a out this WiFi for way XXXX. cellular taking remain up-front holding intended the a our discouraging is from to end be patents we valuable its noted, $XXX patterns. on of of Lenovo video, devices return to

in technical a litigation in in pattern with us all when are standard also our valid, were we our they negotiations case, but to pleased Lenovo against particularly our infringed. licensees. asserted Because strong patents, and of prospective our separate three be in and found essential aspect with each One I'm trials that, pattern only position dispute, Lenovo, places which other essential not future this is

We give and in to portfolio has we is we year wireless, that that the The many directly already pattern in cutting of how we to are, many business. ways edge the the and out connected heart, This research research excel filed market. our high-quality each a of an technology remain ability innovation the bring foundational included innovation year increasingly in video business. examples in at products The our we of to as are AI. our

and the Our engineers XG across produced first a record both new invention in spaces. half filings video number of

in continue XG our XG. advanced, deepening be we our also are of what the for will including XG, work we As first release research

partnership the In XG focus with will U.K. research of announced to QX, a think a the in part that Surrey on we the University standard. specific new become technologies of we

our how of of central so Our the become excellent AI to has networks use reliability ongoing wireless much mobile AI improve the work, an is including innovation. efficiency of of example and

CTO, a the leaders expert leading in has in noted of other emerged field. the in are and for Many has engineers working Our been expert is Rajesh AI our becoming like and as Pankaj years. several well-known space Rajesh,

top We become are that sustainable world, also delighted XXX us in an world’s only innovation were is example, I'm QX, of one to preserve connected we our our in Stating the of strongly the focused increasingly LexisNexis playing improve recently security our on body, more within a [indiscernible] that For of AI. standard part as named in steering has industry ATSC, valuable one we more our and innovation future. engineers believe companies and creating senior our by sustainability. success, in that group towards advances innovation of which standards

shareholders. to I work our over in position thank the all us our a for hand to value deliver hard to strong employees I it Before Rich, want putting superb in and

recent technology combined Our use different build our cases our strength, innovation that ideally of success. growing the and remain importance to financial we with placed means leadership for our

to hand over it I that, Rich. with And

continued and the high QX above pleased management. diluted per coupled Thanks, end share Liren. that share guidance our EBITDA primarily by expense of driven line with I'm This was with in to earnings range. adjusted in expectations, we revenue delivered

we worth received value that year in throughout amount recognized related Lenovo to a High catch-up judgment increased basis smaller large award, as the recurring recurring the a revenue the we QX recognized until we the appeal balance amount in on Court we It's level to Furthermore, that QX, process of conservative revenue. of revenue U.K. when Lenovo progresses. expect initial from recognize the of In of same QX. revenue highlighting and of the QX, same in the or the continue but

still is of on in inherent award. accounting the situation recognition the This to deferring generally conservatism appeal. such, contingent the XX% since rooted As in the we updated award are about the accepted of applicable for some is principles

an Even Notably, adjusted XX% to a delivered with quarters. we strong have revenue the EBITDA we as in EBITDA out profitability of eight continued margin deferral, our XX% drive posted over margin. adjusted seven the million at $XX adjusted EBITDA last of

the adjusted the by inherent margin revenue power a with to as in of to is converted business our cash combined of Our even with discipline revenue only we the half model adjusted EBITDA a our quarter in of maximize over operating conversion our This profit the shows leverage amount ensure driven EBITDA. we catch-up to and flow. model small sales,

cash ability agreements. adjusted a As calls, differences time collections fixed cash of discussed adjusts great our on to the generate because business the to under for EBITDA fee measure in believe our over is last metric we few timing it

we drive more For customer example, this to cash continue year, well receipts, half Lenovo flow including the and we shareholders. year, than but first will of in cash million expect cash used free excess of to QX, return the in $XXX

share in have million tender. for repurchased discussed, first year. shares almost over XX% the of the then, we million. brings a repurchases, the of over reduction billion of $X.XX year-to-date previously repurchased this shares million year, totals XXX,XXX As additional beginning X.X a through $XX Since That quarter to outstanding since $XXX the of Dutch the we shares of

Looking uncertain. of since to revenue guidance new off our contracts of license based timing you agreements that is QX I'll forward to inherently is signed QX, date, the remind

once be recurring around million. QX revenues will expect We $XX again

We expect to be QX. similar operating expenses to

We EBITDA adjusted of expect about XX%. an margin

earnings repurchase $X.XX. finally, to GAAP expect stock. to $X.XX diluted of share continue to We And per expect we

EBITDA hedges on upside Since margin shares due our both dilutive the achieve includes from while dilution. diluted now, adjusted converts million are below to sustain the licenses from an the dilutive accounting million they are GAAP term, and note services. recurring of to converts our additional share licensing of guidance estimated in Longer a device remains and X.X we new revenue economically have annual XX% from products money a count in $XXX standpoint, of It's not that with our $XXX in place. important to are goal

Raiford. turn With back that, to I'll it

are we Michelle, point, questions. this to At Rich. Thanks, ready take

first Anja [Operator Soderstrom from Instructions] with The question Sidoti. comes

open. is line Your

and have case. question execution. Thank on Hi. question my you congratulations the taking solid on Lenovo for the I

got, million that you resolution will for you well? think So And as going now something $XXX license when technologies in regards is you the do Are that's be is -- parallel? other running you the Or the cellular. to to resolved how is progressing? the that just

Hi, Anja. Good morning. This is Liren.

reward -- but I of the captures remarks, of technology. technology U.K. in current XG use as those And $XXX only captures this million judge it until only mentioned XG, our from the end XG, So prepared cellular the also year.

their patents that's for elements using. are and WiFi, is devices have there patterns additional three HEVC we really implementation therefore, that So One, other value.

also not non-cellular of including have laptop, devices, on decision. part their the are We PC their their patents waiting judge's which and

going end after they cellular addition, forward, devices. In even of the unlicensed, are for year the

them, trial mobile in against coming Germany, laptop month. the capture and the against are their value, their in is phones regarding cell devices, HEVC So currently us example, our already ongoing their but actually for and both up have litigation we we next patents the asserting

definitely the our that to for they I fully on we and using. technology said working we're those, be in cracked, prepared as paid are So remarks,

all cash what's Okay. of capital in, terms coming And priorities? your in Thank of allocation with sort this you.

Yes.

noted our comments, indicated, year. Anja, the cash. I our million are so as shares on responsible have quite to authorization. returned, be this of into priorities So cash We've far continue as stewards certainly repurchase I bit $XXX remaining we plan we And a QX. my to in to But of

always, with as ongoing that's, So an discussion us.

me. That was all you. Thank from Okay.

from Jefferies. The with Chen next question Instructions] comes Brian [Operator

open. is line Your

Hi. Thanks for question. the taking

Could to reaching you to Just you've update that target? perhaps $XXX on give ongoing the $XXX cases outlined, the you targets? from please levers an IoT and think pull, million we on the about for revenues. million How that still those $XXX targets upside reach should wireless million for need that wireless

Yes. this Hi, is Brian, Liren.

device for the including bigger sales. Oppo also We So $XXX and decision, Lenovo are annual we case the Oppo multiple very but pending are size-wise towards jurisdictions. for cases part largest which step million have Vivo, of is proceeding unlicensed in Lenovo mobile, against currently that target the well. three on Obviously, regarding the than their frankly

One mentioned patent the have of valid, patterns, which next three the the for up track in is I to have year. the been found February. of October trials to there's U.K. this -- all decision standard to still helpful up-front actually Oppo things be against prepared case important U.K. patents and found infringed actual allows that trial very remarks is three us decision even by in redetermination It's coming essential been standard, patents actually and case, fast a followed an the in in because the and our Oppo for the hearing in my

with we are time Vivo, are is And continuing the them. frankly, line Oppo those -- quite So dialogue regarding active good.

we confident for feel target our So million side. about mobile the $XXX

$XXX Regarding IoT, mobile. the CE growth if our that's our are something million, space, at than the IoT rate here, frankly, program progress. is we look And and our making CE you faster

growth been couple grew for the We we about year-over-year year-over-year. the of last first already. year for years IoT have of double-digit half achieving the this XX% And space

momentum. we'd to keep that on So on like building

follow-up. had Perfect. Okay. And one I just

would opportunity be the could So you perhaps and of and this color processing and have provide out potential strategy services. guys any started Could timing if articulating great. on provide on potential platform monetization on size you an update and you -- building of that this of

this Liren. is Again, look, Yes. Brian,

It's of as services technology. online using, interactively. those distribution and the from So our what reasonable of lot as that if online the beyond benefiting -- using you been the at direction technology doubt video from connectivity kind any either look video, well a our so in services they're are have one

working question on real do launch which a we really bit the been we there, a licensing in program quite So have is how for now.

size market at market to size, If as you enough, space billion look the XXXX, smartphone size. today's is be the which online same projected about video the it's growing is $XXX interesting in to

we Currently, is on at before diligently. opportunity we quite number specific this a to one sign with that have up a on big because working prefer us to don't provide estimate enough a are we more or precise we really license So would licensing least specification put to how it.

keep you have quite that informed, been So diligently we'll working on we space. and

Okay. Great. Thank you.

I’m now back call would questions time. [Operator in like closing showing Raiford to no the for Instructions] I other turn at this the queue remarks. to

remarks. you, back I'll it Michelle. closing for his Thank now to turn Liren

Thank everyone, We look today's forward updating on you, progress you who to joined quarter. call. next our

today's concludes Thank participating. This conference for call. you

You may now disconnect.