InterDigital (IDCC) 15 Feb 242023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the InterDigital Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over today to your speaker, Raiford Garrabrant. Please go ahead.

and InterDigital's everyone, Earnings Quarter to Call. Conference morning welcome Fourth to XXXX Good Garrabrant, Investor Head Raiford am I of Relations InterDigital. for and on me President today's are Rich CEO; Liren CFO. Brezski, With our Chen, call and our prior and year for QX questions. with highlights the opening fiscal year-end offer XXXX will Consistent some we about up before call calls,

website. For you our access that can additional presentation our call this on earnings accompany details, Investor release Relations and slide

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

and Forward-looking events results cause that and could and by materially statements risks actual forward-looking such from are contemplated subject statements. uncertainties events to results to differ

include uncertainties XX-K on report described those XXXX Risk other filings. in Form our of Factors SEC and risks These section annual and our in the

contain non-GAAP Investor included today's supplemental measures. of addition, measures are posted financial in presentation to may website. comparable our financial section references directly the to measures most financial materials to non-GAAP GAAP In these Relations the of Reconciliations the

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

for and everyone. electronics another throughout beyond. in shareholders. why and growth joining business IT filings and progress we feel programs We consumer our Thanks strengthened income XXXX Good today. return year-over-year, will with engine increased to XXXX signed achievements us net new well revenue XXXX was are we record as really Raiford. you, we QX excellent progress new Thank our smartphone innovation our Today, and outstanding our positioned we in and of further our and a morning, more capital number InterDigital. for patent summarize our year for made across agreement our and significantly

to million. and our returned $XXX million. Revenue including million quarter revenue our expanded existing about quarter, In shareholders to the we for EBITDA a million, of just $XXX $XX was adjusted of $XX repurchase our authorization $XXX recurring fourth over million, and was total

world-class as role one of again Our key Board in ACI, played which cellular to wireless a the as engineers of was organization, the the development a of underlined standard status in innovator the our wireless elected European technology. was senior fourth quarter

Looking an for across QX the company. year, XX capped months full the outstanding

up Our revenue $XXX XX% for year-over-year. increased Revenue the XXXX program was smartphone year-over-year. million, licensing from XX% by

revenue increased recurring of over a million. Our to level record just $XXX

top for than our first line, As impact our our an increase on line, we even we EPS. XX% bottom year-over-year non-GAAP drive more our in growth greater in see shown

million detail will In returned dividends his addition, $XXX numbers we almost and share in to in the through more Rich shareholders section. through go buybacks.

highlights financial First, our was the company. full for performance indices, XXXX excellent of

Lenovo, and inventors XX,XXX more applications. patent of our a patent new XX% team, total than record-setting granted and the an for year-over-year. our portfolio which filings HEVC exceptional up inventions cellular with TCL into license agreements On X including license agreements, cellular we with with year and XXXX Panasonic. X number agreement licensing new past and taking patent side, entered patents a and was also created

this research as named quality both As terms the quantity top were holders again engineers a X quality and how patent of was by the evolution in of technology XG of pride recognized leading X our patents We for innovation we third-party take in of company. globally.

election than wireless leadership hold above, Across for our our more leadership noted several I to went positions radio organizations. our development election now recent the to the research engineers and XXX organizations. AI standard senior in of those positions team, engineers addition In

year, innovation. by be courts Right of clear were is compensation our of the U.K. added repeatedly a quality a inference in it our we that In reasonable found notable indicator XXXX, pursuit tested or our agreed in infringement of when and victory According which use that of The in and that in IP they our bring dispute with down third and licensing excluded were both our patents in to Germany, rule patented the and before our Lenovo end resoundingly Oppo's negotiation a we has from Germany be court of conducted manner other the patented and innovation. should quality favor, ruled courts litigation, for in uphold technology. German market. ruled

litigation. time of craticicsm why strong time, our our from court's pattern The throughout help to reflects behavior in negotiation reinforce we Oppo's

While firmly agreements to we bilateral our amicable efforts through always if through sign defending enforcement committed negotiations, we value our IP new prefer are the necessary. to of

X by recognized us recently mid-cap successful as market's which top ranked was our progress Our of Forbes companies. XXX most

I'm upside for recognition, considerable there that areas. pleased still this also by we us believe is particularly While multiple in firmly

momentum XXXX. announced QX continued and we and arrange landmark with patents a digital Rich But Samsung, of detail, X our in our agreement licensed business to a are program In more Our which positive licensing of agreement joint TV the to video and expect result. into will January, patents considerable impact TV that monitors on part their we QX with have WiFi explain Sony. our

and Samsung and only also strength not broundly of value side, largest we the innovation. agreement TV is the manufacture that the see wireless more on CE video but in this the world, the reflects

announced devices, is that CET also is to have beginning other I which agitation. the the being finalized but with now program. our is we distribution agreement cloud to also of streaming the devices As in separate we license entire of smartphones everyone significant want pillar as through which new attractive previously we technology XXXX it discussed, and for our important growth enables essentially our license Samsung continue third with and remind see with at to services, opportunity along and of an them video for compression platform cellular

further resolution success, With held signed summer on licensing this expected The recent arbitration is early platform XXXX. gives than final This success XXXX. agreements hearing another have by an in billion track aggregate incredible and result new strong to not $X.X and very be year. strong deliver since XX with renewals which with our contract over we an the to value more us of from this

$XXX our for reflects guided the through projected pipeline will through and million growth that this new our which between million revenue be Looking year, revenue agreements. for year, full contracted $XXX have we and ahead

that in As strategy a we He that development space life status we as licensing before announced have destination on appointed business. our level was science well, his to company, and very recruitment our the recently journey grow Ken company Monday our continue Group talent. and underlines that, as strategy of as we Ken our top Officer. a understands for Qualcomm's Chief in new charge and business Kaskoun

once in World Mobile Barcelona. in part month, we will again Congress this take Later

we presentation AI, demonstrations our haptics give in senior the one While video wireless, immersive key new of have enhance innovation to several streaming will of power a on our experience. video engineers and of

of a On and be leader. pillar the demonstration wireless which a integrated on side, key communication, technology, and we our will a are sensing will already where XG focus

technology, our you solutions hope energy On AI the over if booth radio and seam and expertise Mobile AI see video media latest high-quality content to side, coupled at our we Congress. I are usage. attending the you with lowering will to energy VC showcase by

in over more With our talk Rich through to that, hand to you numbers detail. I'll you

was XXXX our Thanks, Liren. been results has us we the that position mentioned in. put throughout A execution this ever we company year excellent strongest strong in and drove financial at believe the time, ago what

line margin and smartphone the momentum after Now XX% expansion significant achieving licensing top beyond growth, market.

to excited never better drive to belief that reiterate been the are has our We positioned company growth.

by the we delivering combined Building driven in on last order final strong consistent primarily Liren's well we that The reports which revenue results growth our for QX intervening published our in month. results with items improvement received above margins. Our few XXXX tax full effective came of a favorable comments, was rate I'll noteworthy our highlight as preliminary year estimates, towards lower objective from success demonstrate period. a as

a an increase rate accelerated annual $XXX years. XX% growth Total the of all-time over compounded an in revenue million. reached million, of to Recurring X year-over-year, XX% past revenue of high resulting $XXX

and revenue technologies annual of included horizontal to represents smartphones. than and revenue and years. on XXXX CE This rate bring IoT than the fundamental more compounded markets This XXXX XX% our a value by triple capitalizing new million past our growth X the demonstrates ability other IoT $XX revenue CE success our revenue. over Our from grow is

our Because grew financial adjusted in $XXX to growth XX% revenue leverage of rate of inherent EBITDA million. model, the and the almost twice

result, our XX%. rose exceptional margin improve a and This represents to over the As EBITDA improvement to adjusted points years. continued by an XX-point past X a X

million we $XXX Most XXXX. net dividend in in year. and through of flows this year repurchases million 'XX, first and buybacks room cash also half was December $X of be million our through to These nearly Cash operations to authorization our to in repurchase increase $XXX a by $XXX of $XXX return We enabled After million. for free cash million robust $XXX QX back XX%. have ended cash to flow the us buy the shareholders increased XXXX, million cash. and the flow $XXX another with of we cash continued of billion record from with of the strong the roughly share to and

$X.X XXXX, billion more December XX%, reduced million returned and more shares our we have XX Since by through time, dividends. dividend nearly fewer XX million In outstanding that first than announced our to we share and shares. shareholders from count we than in have to than buybacks

most in important foundation that our Liren step that goals XXXX. thing Samsung all strong accomplished IoT. our agreement have toward TV With is the we've The is that and in XXXX, on carried a momentum significant into and we reaching CE built discussed

million expect million $XX in revenue range million. annualized on Samsung of million we TV $XXX of of $XXX million to and $XX from On and $XXX This QX more sales recurring the be to than an almost the catch-up strength revenue basis deal, IoT. million or $XXX will the CE of includes

does agreements not any between new Our renewals end the include guidance the of QX quarter. now sign quarterly may and we or

$XX million roughly an XX% operating EBITDA of to $X.XX. expense $XX about $XXX of We $XXX diluted to from expect share per QX share will including existing margin agreements million, be $X to earnings non-GAAP million, of expenses adjusted and million revenue

our in business, Given time the and feel of addition the it's outlook. to strong an full appropriate we a quarterly typical pipeline opportunities, introduce guidance year in momentum to

have year $XXX the we total revenue of range fiscal XXXX, million to $XXX to For million. in guided

to share a goal to due catch-up and margin large adjusted sustain the video adjusted our $X.XX. recurring from annual the XX% upside and of from With that, roughly revenue cloud expect diluted earnings device revenue greenfield term, We $XXX EBITDA in $X.XX with Longer licenses with EBITDA remains opportunity margin licenses. on streaming achieve XX% expect services. of from non-GAAP revenue million an associated recent we share CE to of per

York at City like upcoming Before February Virtual conferences; March X schedule Conference the Please be Susquehanna XX to March XX, Conference in XX, conclude, Southern New Sidoti's attending meeting. on on we'll with those Conference California I and the would ROTH I'd representatives mention like you in Cap to check if on the Annual a firms, Tech Small and XX. XXth that

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

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

question from MKM. of [Operator Instructions] today The first that have Scott Searle coming ROTH we is

$XXX little I for. I and to million, looking were is Congrats guidance dive some big for to guys wins or give visibility sounds $XXX the fourth expirations XXXX looking for It related new we number yet down of going some with if of Lenovo it. wondering and come you're contract on recurring quarters? on, you're catch-up the you're could payments second have able course that takes along well there Samsung guess, be relatively quarter your to to either like bit some to the calibrate a It year, expecting with of believe, step be of revenue through in very guidance that. seems is other in presumably improving you the Liren, maybe a renewals the clearly implied a part us I'm in comfortable to the that first arbitration Huawei will to, like above million. what

and what's in wondering could kind you early remainder in first your quarter terms thoughts how about of us thinking the the I'm we of calibrate should be So of with XXXX. if

Yes.

yes. So

So we were if look we high basically, at recurring at revenue record you platform. how acted

expiring, baked it's renegotiation, contracts our have As one you is really of not yet. are which we our the pointed couple currently main out, we have QX in so a number agreement but

mobile is deal the you know, our The Scott, larger Based including a quite of we momentum opportunities on, Huawei, of here, this are what as from and Samsung few based we Vivo. enforcement pursuing. mentioned Aside the Oppo arbitration. effort have you frankly, top really is some on

as and the difficult, portion frankly, And value We recurring negotiation. of are strong revenue opportunity. are feel also, down It's this catch-up deals. say both rating XXXX not we to forward needless at breaking going catch-up payment always, about to the moment, pinpoint very fair versus exactly timing for every pursuing we

does And comfortable so are our thing and I do strong. providing QX forward feel we the guidance. to annual next combination, any may as we on regarding the agreements and where we quarter going want will as numbers. annual include number update in new we well provide very find is provide the mention quarterly one not we as we And may are then

and I of follow-up, annualized Got And into Honor you'll look comfortable there of guess don't be answer you kind kind the of recurring curious I and a equation? you. $XXX what opportunities, in will where if the some XXXX? number exiting that Helpful. newer able that like this, you're I'm revenue like a Transcend fit but guys know Maybe the just as XXXX, versus that with million posted to is

Yes.

So insight. earlier, another provide currently you we we'll year Scott, do as as not more hope give progress, breakdown I recurring I catch-up. of the by And we versus said the

Huawei look Oppo, category. the one if Transcend radar. on us from next they below vendors that them. opportunity stores who at lot our next model, is as Vivo is sort of of business historically are you in because side, and aware, focus were frankly those of multiple the Primarily the Transcend, and are of Honor currently the a the you mobile licensed largest Regarding then are is Lenovo the for owner

Now of gains. there's a volume lot

valued major we other are hope stores we are our licensed So licensee. be them, and time we'll together with negotiating to able some banking them with over add as

be from next of Eisenson with coming Bank our will And America. Jonathan question of

then guys from also on So potential should opportunities devices Liren. obviously, cover? on my other on devices growth edge the for impacts and some about we first question you also of think or How is AI handsets that

have for be a boost to we business. there's technology our aspects per it on AI Jon, Number we at And one, the base. a we will it. we our here, IP of more value of on value side. will adoption believe will a side, way the very per AI the increase so the But multiple significant onto device yield look IP higher believe AI at device of

the increase months be few say XX device market and of AI going thing really is a Second quite reports forward. will driving an in sales next

signing increasing and that's value, with think new good increasing our volume customers. renewal a very obviously, for So we dynamic as up well as

So that's the piece. second

AI we for growth the very is valuable. And of demonstrated technology is piece of our our Video have combinations. last story AI

where notice, are press streaming our video streaming service. you regarding leading have our codec delivery announcement with with this collaboration we for AI If company we monthly a the combining

third as to as over growth strengthen believe well the of streaming story, I this we So refer which time, will an cloud leg online our service. as

in in believe quite grew we into we the the space. and standard some best the it strengths our engineers of So said the opportunity, technology. have in this frankly industry, translated leadership have AI but having a though, few fundamentally, all business AI already always We

So us. impact I'm quite that to bullish of

helpful. Got for it. That's And then follow-up Rich. my very is

now. color guidance bit but there? kind you not a mean can of So of year, little MACI, from potential strong weaker goes kind obviously and EPS questions, the give you kind but And the as the right deals, pretty one look I you growth last of is other talked throughout baked if diluted that's suggests upside off of at the then a full EPS just first it year, there into quarter guidance about some obviously,

year? should So just kind how growth throughout the the about EPS think we of

Yes.

outlook TV first the January. is agreements, Samsung our agreement we by number quarter included And that aided catch-up in that new sales. of in bit including is signed a So quite

into doesn't therefore, period, our in QX. growth repeat QX So QX new time outlook. in the that that's did QX a impact the QX for to through potential we in factor

Anja from coming be of will question Sidoti. next The Soderstrom

the nice progress Congrats on here.

to in the payments just quarters It catch-up catch-up for year all, include but is First the of coming it the potential the clarify pure does revenue just well? guidance. Or revenue? first recurring full as want includes it any I quarter, payments

then payments business the does for our balance catch-up Anja, new QX include for Yes. year. includes the that over and it the it referenced just expectations also I of

that As Liren growth. could recurring not on business there's and of indicated, versus present we're revenue number a that mix. each opportunities a new detailing different catch-up because come from, different they

quarter. continue that you rate And think should helpful. think then tax That we this stay should -- a how lower about Should steady? decreasing Okay. going was from that forward? or And we benefited

Yes.

particular, -- The of year adjustment quarter, tax reversal allowance, our question. about drove to good a in in the valuation had to and rate positive this that XX%. we related down So a for

to There's If you base to in last tax which the X in leverage years, been long-term it's growth. as it's what overall, some business look way becomes teens. we years, profitable, XX%. Over actually talking [indiscernible] some one that the tax we like mid line step-up enjoy. with over of with more the But is to rate in XX% able that well gets fixed don't for benefits think our rate growing of in which of XX%, period, the think we're elements to a time because X new better. grow gone we from the high as the about entire tax tax revenue our XX% -- we've being of pretty as about is the that

now? And what from and in What Ken growth a we you're new officer accomplish will Okay. here? can are he hoping why expect you hire, terms of Kascoun, revenue the hiring

engineer, company, was at we as time well the last strategy responsible Yes, in strategy inventor, also life where of of business. an he's for for work. job he business -- was period hired Ken that, extended he he But where Liren. was science is technology Qualcomm as was really before he was this Qualcomm but Anja, Yes. development licensing his charge for a from

attract so to I long-term -- add company, more our the further because our the we in the it's spend the our able talent company And demonstrates growth are reason for leadership to very, because hard we for the want good. also of very leadership team. to in bring building think add we really to And to best And industry is it's timing-wise, it some team.

will question ] next Our Instructions] Chris [Operator coming William Madison Blair. [ of be from

Chris on for Arjun. This is

for one me. Just quickly

to in or the given the -- Just touch the allocation on position this forward philosophy does strong and wanted to going business is capital as change today, investments XXXX? in approach

Yes.

mean, excess So have tend given balance beyond last we I last where for been return as feel return. we want shareholders, strong many years generation been always our it's that, far exactly want or change we approach, to doesn't opportunity has then sheet. it really -- what make see substantial that's investments for we at certainly to year all. our and to but as keep But the and approach a over it we to cash, well, And important the -- we've so. that cash on the to -- executing for

Liren in would remarks. no are for closing like the questions over back to ahead. to turn I go the Chen, Please more call There and CEO, queue,

Yes. Thank Lisa. you,

the outstanding many progress I'd like XXXX. for Thank you look to an call and close, partners for forward we we to licensees well and joined to our InterDigital, to everyone year as our in next who our their today, as you dedication quarter. thank Before on updating employees and contribution

joining. may you Everyone disconnect. for Thank