InterDigital (IDCC) 31 Oct 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the InterDigital, Inc.

Third Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

today's and Quarter Grace, Garrabrant, everyone. to Rich me Welcome of President Chen, Thank CEO; and Earnings good Conference Third and on With InterDigital. XXXX Relations our Raiford are Call. InterDigital's Liren Investor our CFO. you, Brezski, for morning, call I Head am

company we the call open calls, prior highlights with then offer some about for and questions. the Consistent will quarter and the up

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

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

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

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

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

beginning our quarter major a exceeding third joining accelerated of completed I'm all of business pleased very end guidance strong that revenue, and for QX. have the today. deals everyone. driven us our Raiford. Thanks delivered morning, and by high at Thanks, Good to share adjusted momentum of the we range. EPS with EBITDA

to annual our $XXX guidance raised million at also $XXX midpoint by have XXXX million. We

new of and have of with of already Realme license OPPO, sales we some days OPPO OnePlus a signed you couple devices. branded but start, we covering Group, worldwide announced To the that ago, a seen may mobile

this X in Based provides Samsung, future globally. all their of in of to the smartphone us. in smartphone litigations X Apple of validation of the growth. existing agreement, is have with the both largest now pending and parties licenses -- devices between China, our of agreement, agreement portfolio world. our AI our This the Opel patent we agreed combining part manufacturers XX% With OEMs dismiss Xiaomi, wireless, top the Group As smartphone more foundational and and the have importance license and licensed to video strengthen our and drive innovations about with

the as vendors growth auto the video electronic continue in build to work momentum license major also opportunity we licensing It we remaining drive to smartphone greenfield address our programs IoT accelerates all more and and across our services. consumer from

pleased the our over of Turning IoT now go We his third electronic share end consumer growth delivered section. a about that our numbers the $XXX we of top quarter. to revenue performance will performance licensing. delivered million, mainly the in and from the from exceeding in more QX, Rich guidance. in to I'm in strong detail

are brands our assets. joint with devices program with different recent licensing with in and deals Our of success top new manufacturers. closing that XX CE vendor and excellent Sony agreements an agreement valuable sells TPV, television several HEVC our both The example video InterDigital's include licensing our leading

pad. well beginning at mentioned QX. a licensing front, I as the In and XG and the third signed cellular HEVC cover Panasonic XG quarter, WiFi agreement start we are Staying our as we our great the of which on a as off new also with earlier, patents to --

a the with In the agreement, have Lenovo. a set signed we agreement of agreement new addition binding to Op arbitration to global license terms

also agreement, litigations. petition As both of parties to pending our agreed has part DPR

of licensing reaching disputes, arbitration said global efficient way mechanism for binding have a settling an can an before, agreement. excellent we be more As providing

process the take complete. roughly to months XX expect We to

As for to year. the settle we party with the end devices. final you of of terms decision final just arbitration The are the our have Samsung we a after licensing and to of binding mobile expect hearing soon may a finished recall, in last round

a reminder, determine our a Samsung final As portfolio binding this the XXXX. of January terms agreed already X, to from arbitration license take to And will starting the license.

innovation further technology next-generation industry of in reinvest and R&D ability future. billions whole Our to success cutting-edge licensing our benefit the for the strengthens in that and consumers faster

cylinders. for continue technology, in track keep advanced inventory team in adding all video video year on engineers new and Our our fire filings. our to engineering leadership as and a to VC We record and patent on such on HEVC

Our recognized -- best were position the and convention. consumer processing central experiences. technology. demonstrate in video year's for we remain was award the receivable Both space, at including electronics, this our broadcasting awards best any recent the hosted radio will believe immersive why to new more the video innovation immersive streaming, cutting innovation for at technology international video edge ceremony Board of at video

essential impressive including XG XG to record amount XX,XXX. continue critical total data to over video XG, The increase a growing number content our more In system efficiently are ensuring end-to-end rate, our works bringing even reliably. and in our patent and making also declared of year. application of this Wireless, innovation as globally just every pipeline distribution to day, that XG an consumed mentioned at declared in potentially innovation and

business. X our world compression our of in become a advanced new X growth more we driving and believe in quality separate the WiFi continue research, focused just to reports puts come. on are us the is connected, LexisNexis. a we quality that WiFi licenses, X in among this owners in ranked X report position are business XG, to top our foundational Recently, engine For from top very to constant in terms from and more video of quantity size drive companies portfolio. X world in creation on for invention rank the we with of both years But judge analyzing patent Across this powerful we and growth drives company of to new of of

including During announced target by a our target a September, in Investor $XXX recurring by XXXX. program in million in for revenue of $X smartphone Day billion revenue XXXX, annual we our of annual recurring

license new leader Lenovo are excellent in represents targets. with our summary, WiFi arbitration only and like those agreement towards multiple we critical to technology and which in video, XG, services a industry. becoming progress In recognized more agreements OPPOand AI, are devices

track We superb have team a execution. of world-class and a record

going the our With including video opportunity a services. smartphone, believe in CE path growth markets, and clear we and large IoT, significant We greenfield to forward. drive cloud-based have addressable

to hand that, I'll work Rich. And with you

agreements results we non-GAAP EPS results and our pleased exceeding adjusted excellent These in the as again Liren. by EBITDA new QX as of excellent to the Thanks, with I'm revenue, in share driven that resolution well end QX on of high QX, outstanding range. signed license litigation. were delivered guidance

QX have Our million our from But back or million guidance agreement year $XX also million. increasing us well resulted arbitration guidance a of increase cover of to $XXX was our QX moment. $XXX a agreements, guide. QX, to revenue agreement, OPA prior together getting in in forward-looking our above million. with outlook $XX our I'll revenue to $XXX total and Lenovo license XX% our QX full is This million

Our million. of QX and catch-up revenue $XX revenue $XX revenue 'XX of includes million recurring

with be our program our CE the better-than-expected and TPV, QX the fastest-growing to end QX to revenue license decreased On lower agreement revenue of TV of results. agreements up total to primarily catch-up a mentioned, end in year-over-year. As the of and XX% at Liren year-over-year expiration basis, XXXX. revenue due contributors with Huawei 'XX XX And continued IoT our manufacturer a the leading through top new were

million the for $X.XX EPS $XX in to outlook our very million. $XX per operations was $XX in generation $X.XX quarter EBITDA free and of cash of of $XX of $X.XX compared to share quarter meaningfully exceeded million per came share. of outlook from cash the flow strong range adjusted Our with million. million to our Non-GAAP Cash at $XX

a to As points some believe positioned for going well of like why key $XXX the with value over moment, illustrate Stepping that recent I'd are Investor to a we ended the our in from we drive reiterate million back we result, cash. Day forward. quarter

our innovation and running engine pillars powers is of growth. First, strong X

to X the X and among the WiFi of video holders Liren each in of mentioned, XG, LexisNexis world advanced by ranked compression. patent we are X As just be top in companies

our electronics and toward consumer portfolio across our innovation as IoT annual growth long-term drives This recurring $X streaming. as smartphone, billion of well video revenue of target

translate Second, leverage to the operational inherent and business in the into margin enables cash flow. strong growth our expansion

million long-term XX%, to of adjusted EBITDA margin Our equating $XXX EBITDA. an includes target adjusted of

and returning significant a Third, of for while capital cash shareholders. philosophy allocation also growth reinvest to strength our us to allow amount financial

time the X.X% share discussed year, points to increase of to roughly Day September. XXXX, reduce against our our count meaningful we debt the month. beginning a since at our announced have these of including to the paid progress we these In and last shareholders, XX% which million outstanding We our repurchasing we and short return have targets. capital of since, Investor delivered dividend, this all In $XXX

guidance recurring Specifically, that $XXX expected significant with have level much increase OPO This record ARR. revenue, $XX to million roughly the QX increase to expense we highlight of an the It's an and raised in revenue of million. midpoint prior than ARR important from equating and recent as and Lenovo, for XXXX in more has expected for $XXX the our fact, existing expectation not $XXX a within million of range. despite level a by million, result agreements includes of agreements, of our changed $XXX revenue to of that approximately million remains our in

adjusted driving margin to our with increase the a to full expect million we the midpoint. at revenue adjusted flow result, a XXXX and will XX% expectations EBITDA $XXX through mostly As for in EBITDA year

only the this full would clarification, point date. remaining be have added any With year a guidance. is we year, As based this to X contracts months final in of guidance to signed new updated on agreements

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

Thanks, Rich.

the York. in meeting. to of be a a Before to events both Roth like mention your including you'd Tech Please representatives RBC out to Conference investor schedule those Tech number reach Q&A, I'd we of move Conference, like and that the New we'll if attending and firms to

we questions. Now take to ready are

question Partners. the ROTH [Operator Instructions] of comes with first Scott line Capital Our from Searle

done. has on long coming. OPPO getting X I Congratulations know been time this a

Thanks, Scott.

I a in are revenue an resolution want your like I to But Samsung after sounds have doing from It quarter and certainly, guidance. dive given some you that standpoint, the you're be APO first Samsung, going revenue it's in remarks year. a expect arbitration disclosure said in or -- that Rich, standpoint, of what the thought fourth just some you to of the the And on Lenovo from terms the like, to you recognizing maybe in clarifications in arbitration get of TPV. there recurring you process, opening

that number recurring to that $XXX talked clarify you there's any wanted Samsung that Just if about and of in million.

Yes, Scott.

I'll arbitration from as revenue agreement based the So QX the QX of in Yes, first does well question. our we part agreement Lenovo the well. on signed as the new guidance take OPO, QX include signed as we there in from there

similar to process. So the through the Samsung, set will arbitration be terms

So revenue booking what conservative moment, our based estimate. we're is at believe rules, a accounting on the under we

Yes.

the So follow up let arbitration on Samsung me question.

So had real you we The asking approach hearing correct there we end my questions are plus and based some result primary did as latest was the prepared in the arbitrator say year. remarks, to holiday additional after I the the be completed season. delay that we with arbitration that soon will arbitrator of are on of the

longer. bit fact we a So take will this

complete, we the prior agreement Regarding drop to the believe will is the harder recognition, arbitration do been under QX that's then as conservative. is the the continue and the same be recognizing the than And we revenue the if aware, are turned the time case estimation, which for to of world. you we Samsung as conservative the out number have number at revenue we

number litigation Lenovo I into Oppo down How on and if going litigation Great. the bit it going we quarter. was about some And think and Very dropping. a arbitration of little that got major this on front, forward we've cost to your helpful. could, should . that cost XXXX? But factors. resolution resolution now your Rich,

Yes.

guidance comment expense So fourth than our on for current of I the that say to other expectations details for our to expense want our litigation are quarter. into don't Scott, items baked

But we process. level update maybe continues know . this of the evolutionary to an steps anticipation services, if an Got enough. you wondering And you. we as opportunity. outline be in of video just forward just I could. us I'm should kind broad streaming looking to engagement, Fair some and of if go the on lastly, Liren forward. milestones give could there's be and I XXXX? in terms what

Thanks, Scott.

First for opportunity services of is all, we believe we a do great us.

one us. we the opportunity video, As benefited bit. working been largest the as to it's greenfield fact, are always has this years. on company, very start others for and a multiple of and believe critical has level others We We, from for with a are which matter overall which service believe of innovation, a we frankly quite Kodak

We have in been field. greeting the

We have team. dedicated a

We are the done. predict with you have precise all it get always we years, bilateral deals the but the the we engaging is players we over But demonstrated when to negotiations. hard have major timing Scott, prefer

of always We will portfolio we the acquired patent fair meantime, value our patient we our But for if try to. are as a drive to are aware, assets. the have to and to negotiate value you the in try defend ready

certain the ready a amount have to. get we when this litigation spend we planning, if money partially So we always get of why to is in

AP. the on quarter congrats at

Thanks.

Our with William Arjun line next Blair. question comes Bhatia of from the

on process that. actually you nice get kind to off future for Obviously, that Congrats is to impact there? expecting manufacturers? Apple about and impact on what the maybe Chinese how too you done for licenses of think are early with might these to little Laren, opportunities tell deals signed Does of you. a this deals speed point might Maybe it or the impact guys Lenovo getting the bit -- remaining InterDigital. Great. When your be? kind it Huan are starting What significant see that Vivo with up

positive OPPO for Thanks as a I very done very, getting feel nor do company. us is for

As aware, volume, is Samsung combining airplane. you we see with large are very the regarding did OPPO

to covering we top do have I smartphone accelerates overall signed up of we Now together XX% vendors. and so global down, have vendors the other some few Opel are the momentum license a think -- sales place, other X agreement our with we in get getting

selling are we and to up all up Africa other is do places. If Tencent, few a we sign you else look players. devices identifying major and at will which need sign on primarily the Huawei who Weibo we really our then And in essentially

positive, give those yet So us prepared portfolio remarks, giving and I momentum another value I benchmark for do in our engage it's said us very to think also customers. my as further to

in at turned pricing how some of the economics the And in smartphone -- we you your Perfect. still you Understood. other arbitration, and those economics you and of relative know we on how to agreements I comment agreement, satisfied look can -- prior of terms Apot that Lenovo . to where licensing Okay. like what then compare have just was out terms in with with of should but your least what OPPO terms how do on that agreements?

Yes.

QX if do remarks, specifically. are I confidential, able attention whole increase agreement I I QX, year, not the an over million are so if increase So those on in essentially comment draw at would to back $XX for individual got quarter, be in basis. Rich's One thing year, translate prepared the we our up did ARR see in want And you an mean substantially. to in look the annualized it we you the

obviously multiple a accounts, but should that's some of that give So you indication. combination

from is Got both it. the revenues, Okay. deals us and of we that there see QX? Are that's we revenue a you point. bit going on cash coming actually Can going maybe later? to understand QX? that should in in Rich, flow what to what expect help little happen these Or catch-up something

Yes.

of full million about can baked revenue mention And So we're the revenue. of did I QX, comment on in that is that year kind the recurring $XXX I expecting revenue that guide. into

to you we that of the get kind And from there. that catch-up to $XX overall. do XXX it's the million to algebra increase I of get ARR $XXX So the million can think and

of question BofA. comes from the next Our line Brooks Madelin of

Great. for resolvement as a has up potentially coming talk . think great a what longer I that's have terms term about more just as guess just litigation can year different with been I start can agreements little XXXX? around XXXX from of renegotiation to the want in -- all see remind we as bit us Obviously, what you litigation XXXX. we you and to well we in

you as with for Yes. we at as carton revenue, a XXXX look the but you're predicting Malin the revenue our record-setting year both -- recurring so top were of most line increased our are if revenue projection, well into XXXX. aware recurring

as have we this we to X a more year, make we side. IoT Obviously, are be well strong as starting next So consumer for continue progress we licensing set still which electronic out hope in more. add year, will And the to then smartphone, to months streaming very

Regarding major as bit we in on as expiration, disclose quite a our do well website. for contract filings our

to major are renewal, is obviously which course. I the come we will negotiate we contract, Xiaomi that these my for think X to up mind our

Yes. I the just want end to at be clear, that's of 'XX.

in that 'XX have agreements XX-K. only our $XX last we of into X was going in of So million XXXX disclosed expire at end contributed 'XX, the that revenue

Instructions] next Anja Soderstrom line [Operator with comes question Our from of the Sidoti.

on getting and nice here Congrats up the board. on progress

the these grow large smartphone in revenue terms and should you fee revenue? ratio how add the we OEMs, think of recurring fixed As about the

looking that for? didn't were quite hear . ratio Anja, what you

The variable fixed basis larger? going are they also they ratio on be going on are to contracts basis. be fixed to fee, a as Or a these on

NDA, Yes, a no, the agreement. exact with the contract on won't be so term the OP I specific comment of is under

our However, signed fees. you accounts large on majority are of over are fixed West

the about forward? of rate recurring with taxes, step-up this in think the terms we tax going in should then And Okay. revenue, how

Yes.

kind tax rate the So teens, view there's see think forward, going change long-term rate we and going cash real no think change the rate forward. there. our Anja, like our the about doesn't it in when said to high We've tax of mid- tax you of I dramatically

question-and-answer This I to back concludes Chen remarks. like for Liren it now to the session. closing turn would

you. Thank

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

conclude conference. participation today's Thank the does your for This you in program.

disconnect. now may You